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Profits, Politics and Conflicts -‐ The Next 10 Years

Perennitas Solutions Inc. Siddharth Sarin 1

Profits, Politics and Conflicts -‐ The Next 10 years:

Perils of cyclicality and interconnectivity between Economics, Socio-‐Political

Environment and International Affairs



Table of Contents

Introduction – Economic and other powerful cycles ................................................................ 3 Key Assumptions and Approach ................................................................................................................ 5 Are the two periods (1929-‐1945 and 2005-‐2025) comparable? .................................................... 7 Economics .......................................................................................................................................................................... 7 Socio-‐Political Environment ....................................................................................................................................... 8 International Affairs ....................................................................................................................................................... 8

Economics: Past, Present, Issues and Interconnectivity ....................................................... 10 Economics: What it means, probable scenarios and some solutions ......................................... 15

Socio-‐Political Environment:Past, Present, Issues and Interconnectivity ..................... 17 Socio-‐Political Environment: What it means, probable scenarios and some solutions ....... 19

International Affairs: Past, Present, Issues and Interconnectivity ................................... 21 International Affairs: What it means, probable scenarios and some solutions ...................... 23

Conclusion -‐ Putting it all in perspective ................................................................................... 25

Appendix ............................................................................................................................................... 27



Introduction – Economic and other powerful cycles

“The farther back you can look, the farther forward you are likely to see.” – Winston Churchill After the 2008 financial crisis, a number of economists and investors proposed theories about why we got here, what should be expected in the future, and explained what we had endured, and its similarities to the crash of 1929. We are now in the seventh year of recovery and have reached another point in time that is similar to the past. “U.S. Federal Reserve tightening is marking the end of a super cycle and central bankers are faced with a tough choice. It can do what is economically best for the world, which is a loose monetary policy, or what is best for the U.S., which might mean tightening”1, said Ray Dalio, founder of Bridgewater, the largest hedge fund in the world, in a recent interview in 2015. It is this tightening that has Dalio concerned as he focuses back on a the post-‐1929 crash type situation where debt limits reached their bubble top, interest rates hit zero, money printing kicked off a deleveraging, stocks rallied, the economy seemingly improved and then the central bank tightened in 1937, eight years after the crash, resulting in a downturn. The Dow lost half its value between 1937 and 1938. A hike in Fed rates now may potentially cause a capital “flight to quality” away from EU, China and other markets into the US, slow down the recovery in these regions, eventually causing a global economic slowdown. But this is just the tip of the iceberg. In 1998 William Strauss and Neil Howe published “The Fourth Turning”2. The authors propose that throughout history there have been long

Figure 1, based on data from “The Fourth Turning3



cycles called “Saeculum” lasting about 80 years (not all of them of equal time periods) and smaller cycles embedded within the Saeculum lasting about 18 to 20 years. Each of the mini cycles called a “Turning” (1st turning, 2nd turning, 3rd, ….4th) is associated with certain events within a society. These events manifest in a sequence as a High, an Awakening, Unraveling and lastly a Crisis within the society after which one “Saeculum” ends and another begins. According to this theory, we are in the midst of a crisis, of the sort last experienced by the world in the period 1929 -‐ 1946. This begs the question, can we forecast the next ten years and how different facets of human life and markets will play out. Considering that we have had ample number of events that eerily match events across the international and domestic space to the ’29-‐’45 period it behooves us to pay heed to them. Events within each mini cycle (turning) are brought about by the actions of a sort of collective consciousness that defines that generation as per Jungian archetypes (Prophet, Nomad, Hero and Artist). We will not be focusing on Jungian archetypes in this essay. Why? Because it is difficult for me to accept that an entire generation and actions of that collective can be attributed to only an archetype. What is powerful is that these trends and cycles have manifested with consistency across centuries, as proposed by the authors. In this essay I also refer to the economist, Nikolai Kondratieff, a Soviet-‐era economist who proposed that capitalist economies move in cycles consisting of alternating intervals between high sectoral growth and intervals of slow growth. These generational cycles of invention, expansion, and depression last around 40 to 60 years and over time tend to shorten. Stalin didn’t like what he said, put him in a Gulag and Nikolai died at the age of 46. But his theory survived and his “Kondratieff waves” are often quoted by scholars4. The waves are roughly divided into four “seasons”5: Spring -‐ a new factor of production, good economic times, rising inflation. Summer -‐ hubristic 'peak' war followed by societal doubts and double-‐digit inflation. Autumn -‐ the financial fix of inflation leads to a credit boom, which creates a false plateau of prosperity that ends in a speculative bubble. Winter -‐ excess capacity worked off by debt repudiation, commodity deflation & economic depression. A 'trough' war breaks psychology of doom.



Figure 2 If we look at both these models to analyze what happened in the past and forecast the future, they appear to be pointing in the same direction. Strauss and Howe have addressed more dimensions like society, politics, economics and generational trends. Kondratieff has focused on the economy. Both however show that it has taken a crisis to get us out of a major morass and the morass has always been preceded by economic problems. According to the Kondratieff wave above, five major economic cycles, characterized by long periods of prosperity have generally ended in a major crisis. As per Strauss and Howe, the three saeculums prior to this one (keep in mind not all saeculums are of exactly the same time period) have always ended with a “Crisis” that included economic problems followed by a great conflict. 1704 – 1794: Ended with the war of American Revolution. 1794 – 1865: Ended with the American Civil War. 1865-‐1946: Two world wars, and the period ended with WW2. 1946 – 2025: Will it end in a major conflagration? Can we avoid it this time around? Based on these cyclical theories, we can see what the next 10-‐15 years may look like in the interconnected areas of economics, socio-‐political environment and international affairs. Because these forecasts align with cyclical patterns, we should be able to avoid the follies of the past and unwind this next fourth turning.

Key Assumptions and Approach - This is a primarily US centric view, secondarily an international view that considers US action to be very significant for global stability.

- No two crises or outcomes are alike but have similar “focal points”, e.g. market crashes. - Severe scenarios do not include any possibility of extreme situations like a nuclear strike or assassination of a major political figure.



Figure 3 The task of addressing all variables impacting the interconnected nature of the three dimensions above is a daunting one. Therefore I have identified the most pertinent variables based on research that I believe have the most impact. - The model’s construct is that unemployment, wage inequality and debt are factors that

would have an impact on the society and on the sentiments of voters thus impacting the outcome of elections. Debt would also impact the relations between nations as we can see in the case of the EU vs. Greece as would the energy demand and supply equation that has historically been highly correlated to geopolitical events. Climate change would have a peripheral impact.

- Socio political environment would determine the outcome of elections (in democracies) or a process of selecting a leader in other forms of government, and will in turn determine a swing towards conservatism or liberalism which would also have an impact on government leaning towards multilateralism or unilateralism and determine the level of conflict or collaboration with other nations which would in turn also impact socio political environment. This assumes

- The inclination of the government to collaborate, a policy of unilateralism vs. multilateralism to resolve international issues would determine the level of conflict and the state of international affairs which would in turn also impact the economy.



Are the two periods (1929-‐1945 and 2005-‐2025) comparable? For those who are numerically inclined let me put together some facts and numbers, in case you haven’t been convinced already, about similarities between the two periods in question, 1928-‐1945 and 2005-‐2025.

Economics

• Both crashes (1929 and 2008) were preceded by rapid credit expansion that led to high leverage.

• The Shiller Price/Earnings ratio (where a market with PE value over 25 is considered expensive) close to level of 30 prior to both crashes (1929 and 2008).

• US government Debt as a percentage of GDP: 40% after the ’29 crash (1933), reached a high of 120% during the second world. After the 2008 crash debt to GDP levels reached 100%. The problem is while debt levels started falling sharply after the Second World War, debt hasn’t quite reduced after the crash of 2008.

• Gold to S&P ratio: A low ratio signifies high confidence (gold low, S&P high) and a high ratio signals a lack of confidence (gold high, S&P low). Before the crash of 1929 Gold/S&P ratio was on a downward trend and hit a low of 0.66 subsequently rising to a high of 4.23 after the crash. The same ratio climbed from 0.46 to 1.43 on 2011 after which the ratio started to go down again as market cap increased (http://www.macrotrends.net/1437/gold-‐to-‐s-‐p-‐500-‐ratio).

• Market Cap to GDP: A ratio used to determine whether an overall market is undervalued or overvalued. Typically, a result of greater than 100% is said to show that the market is overvalued, while a value of around 50%, which is near the historical average for the U.S. market, is said to show undervaluation. Very high before both crashes. In 1929 before the crash it was at 81.4%, and over 130% before the crash of 2008. It is starting to inch back towards 110%.



Socio-‐Political Environment

• The Gini coefficient is a 0-‐100 scale where 0 means perfect equality and 100 means perfect inequality in wages. Anything over 40 points towards rising probability of rising social issues and increasingly negative socio-‐political sentiment.

• In the US the Gini coefficient (a generally accepted gauge of wage inequality), between 1979 and 2007, for pretax income, according to a study by the Congressional Budget Office rose from 48 to 59.

• The chart below shows Gini levels in the US in the 1929 period and around 2007 are at the same level. On the whole there is a general trend that is pointing towards greater inequality. Recent trends also point towards an increasing Gini coefficient.

International Affairs

According to the Global Peace Index6 -‐ • For the most part, the view that the world has become more peaceful over the long term

holds water. However over the past eight years things have deteriorated. This decrease in peacefulness has not been evenly spread, with 76 countries improving while 86 deteriorated. The Middle East and North Africa (MENA) region has suffered the largest decline of any region in the world, deteriorating 11 per cent in eight years. The fact that several indicators in the GPI have deteriorated over the last eight years and the impact of terrorism is getting worse, should be cause for concern.

• This decrease in peacefulness reverses a long-‐term trend dating back to World War II, which had seen steady increases in peace, especially after the end of the Cold War.

• The latest UNHCR (United Nations High Commission for Refugees) estimates indicate that more than 50 million people are now either refugees or internally displaced



because of conflict and violence, the highest number since the end of the Second World War.

According to the Center for Systemic Peace7 and the Heidelberg Institute for International Conflict Research8 - • In the period 1930 to 1939 (before the 2nd world war) there were approx. 30 inter-‐state

conflicts all over the world (Wikipedia). The levels of both interstate and societal warfare declined dramatically through the 1990s. The trend appears to have changed in the mid-‐2000s back to an upward trajectory. From 2005 to present approximately 40 separate conflicts small and large scale though most of them are centered in Africa and involve Muslim nations.

• Overall, all three, low, medium and high intensity conflicts show an upward trend from 83 conflict in 1945, to 424 conflicts in 2014. Noteworthy is the steady increase of medium intensity conflicts that increase more rapidly beginning in 1990.

Convinced? Scared? Relax, there are saving graces.



Economics: Past, Present, Issues and Interconnectivity

Let us compare 1929 to 2008: Then: Gold standard breakdown, credit boom, banking collapse, international trade collapse, wage gap, great depression and out of the wilderness with the New Deal. Debt to GDP in the US in 1930s ballooned but came down, however after 2008 it continues to grow. Now: No gold standard, global economic bubble, credit crisis, banking collapse, recession and out of the wilderness with the bailout package aimed at banks with a prolonged low inflation, low growth situation. According to the Kondratieff wave, we are in the “Winter” or trough and transition stage of the wave, a period where insane excesses of the “Autumn” are purged or cleansed. The ultimate result is a deflationary recession or depression. There is usually a banking crisis. Bankruptcies and foreclosures increase, as does social discontent. A major difference is that we are equipped with greater knowledge, connectivity and information and collaboration to be able to make more precise decisions. However even after massive liquidity being made available with the bailout we are still facing a liquidity issue in the US. If we blend the Kondratieff wave across several decades with the findings of Strauss and Howe we find the conditions leading up to crash of 1929 were incredibly similar to the ones preceding the financial crisis of 2008. The difference between the two periods is, this time around, the central bank was hyperactive in using the levers of monetary policy and regulation. Although this essay is focused primarily on the US economy we cannot ignore that while this is being written there has been a stock market rout in China where $4 trillion of the country’s stock market value has been wiped out (signifying over 30% of the total stock market value). The government had to intervene to stop short trading in over 40% of companies to shore up market sentiment. The Chinese situation in terms of easy, even frivolous credit terms is even more mind-‐boggling than the US story pre-‐2008, e.g. companies in China were able to get bank loans by pledging their stock as collateral. “Looming over all of this is China’s massive run-‐up in debt, which has increased by over $20 trillion—to around 300% of GDP—since the global financial crisis in 2008” , says Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management and the author of “Breakout Nations: In Pursuit of the Next Economic Miracles” (Norton, 2012)9. So now we have two economic powerhouses, in the west and east. The west recovering albeit steadily and very carefully, the East recently jarred by a major market correction, borrowing a page from the history books may show them a way out of their morass, the way their western counterparts had maneuvered after 1929.



Regulations -‐ In the aftermath of the credit crisis, economies all over the world are struggling to grow and there has been a lot of quantitative easing which has fed bubbles and on the whole helped the wealthy with capital gains through the markets while causing minimal impact for the common man. Steve Schwartzman, CEO of Blackstone wrote in his Op-‐Ed in the Wall Street Journal, “Recent studies by economists at the Richmond Federal Reserve and Harvard University both concluded that the 2010 Dodd-‐Frank financial law contributed to this decline. Dodd-‐Frank has disproportionately burdened community banks, despite their having no role in the financial crisis. While many banks actively lent in 2008, the new capital requirements will cause banks to hoard capital with an eye toward satisfying the regulators, rather than meeting the needs of their customers”10. The reason, why QE did not lead to hyperinflation is because the state of the economy was already deflationary when it began, then the banks hoarded money to shore up their balance sheet. A regulatory mechanism guaranteeing adequate credit for main street would have been a better solution. Wage Inequality -‐ Consider another variable, wage inequality. In 2014, Nearly 3 million hourly workers in the US were at or below the federal minimum wage of $7.25. Those 3 million represents 2.3% of all wage and salary workers. About 20.6 million workers are “near minimum wage”11. Is it then surprising that 15% (46.5 million people) of the total US population is on food stamps?12.

Figure 4 Minimum wage, adjusted for inflation is worth $2 less today than it was in 1968. A raise in minimum wages to say $15 will have multiple benefits. Not only will it provide adequate sustenance to the poorest, but also allow the government to possibly scale back on food stamps and other welfare programs. Studies have also shown that people at the lowest income levels tend to spend most of their income, thus putting that money back into the economy. Therefore not only would raising the minimum



wage fulfill a humanitarian goal, it would lower the government’s spending and boost the economy. Unemployment -‐ In the World Economic Forum’s “Top 10 trends of 2015” ongoing unemployment was the second biggest concern after increasing income inequality. In among the top, especially in the 25-‐54 age group, the bulk of our workforce the percentage of those who are not working has increased exponentially13. In its latest report, the ILO points towards greater inequality resulting in sluggish jobs recovery and social instability brought about by the global economy entering a new period combining slower growth, widening inequalities and turbulence14. Although in the US unemployment has markedly gone down since the great recession, wages are still stagnating. The story in Europe, Latin America and Africa is very different. Unemployment levels in these countries and in a large part globally are likely to remain at the current high level until 2019. Therefore a combination of short and long term solutions is desperately required. In the past (1929-‐1945) wartime spending helped pull the nation out of high unemployment. The governments in these countries and indeed US may need to do something similar during peacetime in connection with infrastructure spending. For the US, in the long term, simplifying the corporate and individual tax code and incentivizing businesses to contribute towards human capital development programs will also help. Adequate sort of tax reform can also encourage US corporations to repatriate their cash abroad and help grow the US economy. Countries can borrow a page from the German model where youth unemployment is lower than in any other advanced nations helped by an efficient apprenticeship program. The crux of this apprenticeship program is vocational training offered to students after graduating from school. After the program the students are free to pursue higher education or get a steady job in the workforce practicing their tradecraft, either blue or white collar, but at least they have some training under their belts. Debt -‐ US and global debt serves as the third part of the global trinity of issues that is always given ample discussion time in the top forums yet very few concrete steps have actually been taken to do anything about. US total debt to GDP is at an all-‐time high. If we are to believe some, there may even be a debt reset coming. According to Raoul Pal, a global macro investor, “Why will the financial system collapse: too much debt, that can’t be repaid. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives (that equates to 1200% of global GDP). Moreover, our ability to service this massive public/private debt load is rapidly decreasing: All of the big economies are now entering a new recession, at the same time. This is the first time this has happened since the 1930’s. Worse, these economies are entering a new recession without recovering the ground lost in the last recession, again the first time since the 1930’s”15. One must observe that it is 2015 and we haven’t had a financial “End”, however what is interesting is



that the fundamentals and metrics that Pal points towards have only gotten worse since 2013 (when he made this forecast). In This Time is Different: Eight Centuries of Financial Folly, Carmen M. Reinhart and Kenneth S. Rogoff (2009) show debt restructurings were part of almost all post financial crisis periods in the past and probably will be in coming years. It is impossible to imagine that without a major reset and restructuring of debt, growth alone can pull countries out of debt. A study by the Bank of International Settlements (BIS) warns that budgets of most advanced economies, excluding interest payments, "would need 20 consecutive years of surpluses exceeding 2 per cent of gross domestic product -‐ starting now -‐ just to bring the debt-‐to-‐GDP ratio back to its pre-‐crisis level". The same authors found in a previous study that increased financial burden imposed by aging populations and lower growth makes it unlikely that indebted economies can grow out of their debt problem16. A Boston Consulting Group study suggests a rather daring solution that would in one fell swoop solve debt problems. It entails financing debt with a one-‐time wealth tax of between 11 and 30 percent. The authors of that study acknowledge that it would be an extremely unpopular measure but the more such a measure is delayed the more desperate its need will be. In short we need an extreme solution, half measures and changes in fiscal and monetary policies of individual nations, even one as powerful as the United States will not suffice17. Moving over the pond to Europe, Greece will be a thorn in the side of Europe for a while, not to mention the debt situation of the other European nations. Europe’s lack of fiscal integration is a corrosive threat to the union on the whole. Comparing the EU to the US for the purpose of evaluating the efficacy of fiscal integration: Federal government budget equals 20 percent of GDP. According to The Economist, Connecticut paid out 5 percent of its gross domestic product in net fiscal transfers to other states between 1990 and 2009. The European Union’s central budget is only about 1 percent of Europe’s G.D.P. A more centralized E.U. budget could provide similar macroeconomic stability to Europe by creating a stronger fiscal union18. This has one enormous challenge, convincing the more prosperous nations to do what Connecticut does in the example above. It would seem that nations are much more reluctant than states to share their prosperity with other nations. Energy -‐ Energy has always been a powerful factor in the confluence of economics and geopolitics for decades and there is little evidence that this trend is going to ebb in the years to come. However the overall equation may be modified a little. Going forward most of the growth in fossil fuel consumption is likely to be in the Indo-‐Pacific region19. At the same time the US is emerging as a global and importantly self-‐sufficient energy-‐producing giant (It has now overtaken Russia as the world’s biggest natural gas producer). As Russia and the Middle Eastern nations focus more on Asia as the center of new markets and



source of their energy revenues, maritime strife in these areas will also increase. European growth is forecasted to be tepid. North America and the Indian Ocean area are likely to be the centers of commerce. At the same time, however, we may see, some alliance of sorts between Russia and China, underpinned by a growing energy based relationship and a competition with the West. A simple calculation shows that with demand flattening in most of the indo-‐pacific region and supply glut continuing, notwithstanding Iranian oil coming online, and OPEC nations showing no sign of cutting production (in order to defend market share), Oil prices are likely to go down further, maybe even down to $30 level. When we factor in a strengthening dollar and at least 2.7 billion barrels per day of Iranian oil adding to the current production within the next 8 to 12 months, and no concrete signs of global demand upturn, this low price thesis tends to crystallize even further. This scenario is of course considering interest rates at the current level. Should the fed raise interest rates, the scenario is likely to turn more negative and push oil prices down. Climate Change -‐ That bugbear that refuses to go away and continues to seep into every facet of our life. Consider this, the Pentagon is running national security scenarios with climate change at the core while financial services firms have started including cost of climate change in their valuation models. Although it is a serious problem that will impact the US and the rest of the world, for the purpose of this study focused on the next decade, I have assumed the impact of climate change as peripheral. One of the reasons is that scientists who met in Japan in 2014 to finalize the much-‐anticipated Intergovernmental Panel on Climate Change (IPCC) report on climate impacts and vulnerabilities called such economic estimates as “difficult” to make. The closest they came to an overall number was to say that aggregate losses across the world economy have a more than 50 percent chance of being greater than 2 percent of global GDP. They also noted that for most economic sectors, the impacts of climate change would be smaller than the impacts of population and technology change20. US Markets -‐ US stock markets are in a word – overheated. US Market Cap as a percentage of GDP is twice as high as the ratio prior to 1929 crash (current 204%, before tech crash 203%, 1929, 87%). A study of stock market bubbles by the hedge fund GMO shows that the S&P may be considered to be in bubble territory at a 2-‐Sigma level, around 225021. What then? There have been conflicting views from several economists but the most plausible one is that a correction is to be expected and subsequent to that real growth will be slow. Interest rates are also likely to remain very low for a very long time. The Fed cannot ignore a weak Europe and slow growth in Asia and in effect engineer a serious blow to key trading partners that are struggling, by raising interest rates. There would be a flight to capital flow out of those geographies weakening them while strengthening the dollar at the same time.



So we have US and global wage inequality, global debt problems, a slow growing US, an overvalued US stock market, weak Europe and China. The US Fed on the cusp of a rate hike and an energy demand and supply equation that has shifted with commodity shocks already being felt. We can repeat the mistakes of the past or take a more global view.

Economics: What it means, probable scenarios and some solutions Based on qualitative research the probability of the overall economic environment is as below: The chart below shows that, viewed in a holistic manner, there is a high probability the economic environment over the next decade may look like this with the specific underlying events, their probability of occurrence and impact as described below. For e.g. The likelihood of commodity shocks over the next few years is pretty high and their impact will be negative. At the same time some easing of financial regulations like Dodd-‐Frank will have a positive impact on the overall economy but the probability of easing is close to Medium. (Note: probabilities are approximations based on qualitative research. See Appendix for details).



1. It seems pretty certain that this is going to be a low inflation, low growth and low interest rate environment.

2. The US needs to be the anchor for global growth with The Fed taking a more global view and delaying interest rate hikes that will help the world economy and in the long run prevent a global recession.

3. *Greater infrastructure spending by the government to aid in bringing down unemployment. One way of doing this could be to set up Public/Private infrastructure funds for building new roads, airports and high-‐speed rail.

4. *Create more apprenticeship programs to help bring down youth unemployment. 5. US and indeed global sovereign debt:

i. A global debt restructuring that writes-‐off part of the debt financed by a one-‐time heavy (11%-‐30%)wealth tax.

ii. Create a basket of reserve currencies, either the current IMF Special Drawing Rights (SDRs) or something similar thus stabilizing the global financial system.

6. *A concerted effort, which involves a combination of corporate and individual tax reform as well as minimum wage hikes to alleviate the wage inequality situation.

7. *A socially progressive perspective in managing the economy as opposed to an austerity focused growth plan is the only solution that can resolve inequality and unemployment issues which left unchecked are likely to morph into unpleasant manifestations across society, and politics causing internal and external strife.

(* Indicates that the suggestion would impact socio political dimension as well) Here are some investments in regions and asset classes in the years to come that may lead to higher than average returns. • Global value stocks including Net-‐Net Stocks especially in Europe and Japan. • US blue chip stocks. • Solar stocks with an international footprint and strong balance sheets. • Direct investment and real estate in European emerging markets with good growth

potential, e.g. Poland. • Chinese and Indian consumer sectors: once the situation in China is stabilized and

India pushes through key reforms. • Agricultural land. • Gold. • Investing in select crypto currencies, especially as a debt reset approaches. • Fixed Income: GNMA mortgages, 10-‐year tax-‐free municipals, 10-‐year investment

grade corporate. (I personally plan to stay away from bonds due to limited returns)



Socio-‐Political Environment:Past, Present, Issues and Interconnectivity

Strauss and Howe point towards political upheaval during Fourth Turnings. The one thing that happened in the aftermath of the Second World War in terms of an upheaval in social and political environment was that a clear ideology that emerged in Europe that promised to alleviate the pain of the masses, Fascism. It had raised its ugly head ever so slightly before the 1st world war, but combined with economic upheaval in the shadow of the Great Depression, it found a warm cocoon in the war weary and impoverished people of Europe and emerged with all its monstrous glory. Is there a new political order, an “ism” that has come forth in the aftermath of the credit crisis of 2008 in the US or elsewhere? That doesn’t seem apparent. However consider Arab Spring, Iranian green twitter fueled (failed) revolution but these are signs that globally there is immense discontent. Another phenomenon Strauss and Howe have pointed out in the Fourth Turning that during “Crisis” periods such as the one we are in now society appears more inward looking than at other times. This can be translated into an “America First” or a “Me First” syndrome. Both the 1929-‐1945 period and the current one were marked with considerable social change, be it the tea party movement, President Obama’s election (a momentous historic occasion). Moreover, the Obama presidency has been quite inward looking with the phrase “leading from behind” being coined to describe some of its policies. It doesn’t seem as severe as the past period but the US did reach a liberal milestone and has more inward looking. Wage Inequality -‐ Growing inequality in wages is another sticky point across the world (addressed above in the economy section as well), a problem admired and addressed by the most influential and powerful people in most top forums with no real concerted effort around a viable solution. Across the Atlantic, Europe is still reeling from the financial crisis with high youth unemployment, a time tested predecessor of socio-‐political change. Incarceration -‐ A growing topic of concern in the US for many years has been mass incarceration. According to the “Sentencing project” (sentencingproject.org), the United States is the world's leader in incarceration with 2.2 million people currently in the nation's prisons or jails, a 500% increase over the past thirty years. Another staggering statistic is While the United States represents about 5% percent of the world's population, it houses around 24% of the world's prisoners. That means more than 1 out of Americans are behind bars, most of them belonging to minority communities (Latinos or African Americans). Not only is this an unconscionable state of affairs, studies have shown that benefits of mass incarceration are minimal at best, wreaks havoc on poor communities and costs a lot22. So why is it so? Since the 1980s the impact of laws like “3 strikes”, mandatory sentencing and “truth in sentencing” laws aimed at keeping people in prison for long periods of time has



ballooned the prison population to a level that has earned America the moniker, “Incarceration Nation”. Closely (but not entirely) related to this issue is the case for marijuana legalization. Although the case of legalization has gotten great traction and in many areas of Europe and the US people have started to realize that advantages outweigh the disadvantages on the whole, there are still areas holding out. I believe in the years to come there is going to be a steady move towards legalization, not en masse but a steadily growing shift in most communities and ease with the idea of legal pot. The government should support this move aggressively, firstly -‐ to raise more revenue, secondly -‐ rid ourselves of a law that is quite plainly unnecessary and in the process reallocate law enforcement resources to more important issues while reducing incarceration. Liberalism Vs. Conservatism -‐ There is yet another major trend around the world. Voters in a large number of countries have swung to the right. UK voted conservative, and a number of other nations are leaning towards the right, India, Japan, Australia, New Zealand and Russia (not a classical democracy but nonetheless). The US is currently the only industrialized English-‐speaking nation at the moment, with a liberal party’s leader in charge, even though both houses of the congress are already controlled by the conservative side, a sign of shifting voter trends. Could this change, with Hillary Clinton being considered by many to be not only a shoe in for the democratic nomination but the presidency as well. However, there are a few hurdles, According to the political analyst, Nate Silver, “A general election win by Clinton — she’s very likely to become the Democratic nominee — is roughly a 50/50 proposition and we’re not likely to learn a lot over 2015 to change that”23. Is it possible with American voters leaning powerfully right of center that two milestones can be set (the first African American president followed by the first woman president)? There is also a historical hurdle that she has to overcome. “Since the end of the 20-‐year Democratic run in the White House that began with Franklin D. Roosevelt and ended with Harry Truman, there have been six occasions when either major party could have extended its control of the White House to three terms. But it happened only once, when George H.W Bush won in 1988”24.



Democratic share of Presidential vote, 1828-‐201225

Figure 5 So Hillary Clinton definitely has a pretty serious hurdle to clear and even if she wins public sentiment may force her to keep her liberal side under wraps and make her actions more centrist, even right of center. To sum up, we have wage inequality in the west, a crippling debt problem, mass incarceration in the US, a lot of social resentment in the Arab world, a swing towards nationalism/conservatism in several countries and an unclear US political landscape.

Socio-‐Political Environment: What it means, probable scenarios and some solutions There are a number of things that we should do, and any number of things that any administration can do. However, based on research the probability of what might get done to impact the overall Socio-‐Political environment is as below: The chart below shows that, viewed in a holistic manner, there is a high probability the socio-‐political environment over the next decade may look like this with the specific underlying events, their probability of occurrence and impact. For e.g. this shows that the likelihood of democrats winning the presidency is very slightly higher than that of republicans (I have abstained from making a judgment on impact, good or bad) since there is only one scenario that shows a republican presidency. A higher minimum wage would have a positive impact on society and help bridge wage inequality gap but the probability of this happening seems low even with a democratic president. (Note: probabilities are approximations based on qualitative research. See Appendix for details).



1. US and indeed other OECD nations must focus on improvement in inequality and

unemployment via socially progressive programs (see solutions in the section on ‘Economics’).

2. Governments must ensure greater gender equality especially around equal pay and representation in senior management positions in public and private sectors.

3. The government in the US should make a concerted effort to reduce mass incarceration, marijuana legalization could be a small step in that direction which would also have other positive impact on tax revenue generation for the government as well as freeing up law enforcement for more pressing concerns.

4. Although the general trend in other countries towards nationalism cannot be reversed or interfered with, US voters must choose carefully and keep in mind the importance of this election not only for them but the world by voting for leaders who understand the importance of socially progressive measures and are not stuck to dogmatic leftists or rightist beliefs.

5. America, and indeed the world, at this fulcrum point in history, needs a US president who is a centrist, espouses multilateralism and conflict resolution. Someone, who is deeply committed to the social development element of economic growth rather than stoking the fires of nationalism and right wing conservatism or even extreme liberalism.



International Affairs: Past, Present, Issues and Interconnectivity

Current Conflicts -‐ Russian and Chinese belligerence, trouble in the Middle East, current rise of ISIS, a terrorist group with a landmass and resources at their disposal, Europe – a mess. In the past period of 1929-‐1945, Middle East wasn’t a “problem” but Russia was a powerful force and Europe was a royal mess with the US focused primarily on itself. Let me remind again, no two crises are alike. Maybe the next crisis, and we might be well in the midst of it, will not look the same because we’ve been two de-‐sensitized by the constant barrage of cable TV images from around the world. But, the problems remain and they are simmering. There has been a great rise in a number of powers all over the world, India, China, and Russia being the largest of them. The Middle East is still a smoldering cauldron with a very violent war underway between ISIS and Shia Iran backed and in Yemen between rebels and Saudis. So Chinese belligerence, Russian “expansionism” and belligerence, Middle Eastern Shia-‐Sunni conflict and of course that mainstay of world-‐wide bane, franchised radical Islam. As a rapprochement with Iran is being attempted, no one knows the true impact of a successful nuclear deal, if a meaningful deal is reached. Although not quite the same level of strife economically or socially as in the 30s but there are simmering rifts all over. The Arab spring may seem to have blown away but those sentiments are still very potent and simmering under the surface. And then there’s Afghanistan. Although having moved to the backdrop of world attention, it still remains a country on the edge bordering a nuclear-‐armed neighbor, Pakistan that has a fragile and volatile record of democracy. One of the connections between sentiment and international affairs is level of conflict between nations. Although we in the US don’t feel it directly, most regional eco-‐systems (described above) in the world have conflicts currently underway where conflict has started to seep into socio-‐political sentiment. Although the US has engaged in greater multilateralism over the past eight years its perspective on the whole has been leaning towards non-‐interventionism. If we compare to the past, the situation was quite volatile then as well, with the US firmly taking a non-‐interventionist, “US first”, stance. EU -‐ The European Union is likely to become more fractured and fragmented over time. Essentially what benefits one part of Europe harms another because of the free trade zone26. It is in the interest of Germany, a country dependent on exports, to discipline the more fiscally irresponsible members of the union while ensuring they don’t leave. Germany wants to save the free trade zone, but without absorbing Europe’s bad debts. This has and over time will further exacerbate the cracks within the EU. “Given the rise of populism in Europe and anti-‐EU sentiment, fears that mainstream politicians may begin navigating



toward separatism. There seems to be no energy to build future European institutions, and there is systemic malaise,” says Ian Bremmer, founder and President of the Eurasia group. Should the UK leave the EU or even become more of a peripheral member, after the 2017 referendum, it would be an immense blow to European integration and considerably painful to the UK as well27. The only solution it seems is for the EU to improve its fiscal integration to evolve to a functioning and stable union, otherwise the integrity of the union is unlikely to be sustainable. Russia -‐ Since 2008, after the war with Georgia, Russia has emerged as a significant and capable regional power. Its recent annexation of Crimea and aggression in Ukraine has been to project Russian power very assertively in that region as a reaction to a perceived encirclement by NATO. From a US perspective, we must intervene and in doing so look at Russia’s perspective as well28. With sanctions that are likely to cripple the Russian economy even more, not to mention Iranian oil coming online adding further downward pressure on oil prices, the key source of Russia’s revenues pushing it over the next few years into a crisis situation. “We also should indicate to Russia that we favor and expect that Ukraine’s eventual place as a genuine European country, a democracy, a member of the EU, will not entail membership in NATO. Only the United States in the present circumstances can explore the possibility of such an accommodation because only US involvement guarantees Russia’s attention”, said former National Security Advisor Zbigniew Brzezinski. According to Ian Bremmer of the Eurasia group Russia is unlikely to tone down its belligerent behavior notwithstanding sanctions29. In the short term All said, an isolated Russia is likely to become even more belligerent and aggressive and make pernicious alliances that could harm US and EU interests for years to come and a coalition without the US is unlikely to get adequate attention from Russia to make a deal. This does not mean advocating unilateralism, which would be disastrous, but at the very least a more engaged US. Middle –East -‐ As noted earlier the entire middle-‐east region has been having considerable social upheaval. Although the forces that were unleashed during the Arab Spring, nothing has really come out of it and the old institutions seem fairly strong. As always the Middle East is a complex situation so let us evaluate it from the US perspective. With the US taking more of a behind the scenes role in that it may not deploy several divisions but will continue to provide material and diplomatic support to key nations. Turkey, with US backing, is likely to play a more assertive role considering that its southern and eastern borders will be most exposed to instability emanating in the neighboring countries30. Iran is likely to be contained, with the government focusing on priming the economy and might over time start posing some degree of competition to Turkey. What the US has not done



and needs to do it to play a more engaging and collaborative role with a clear strategy and support regional moderates like Turkey to take action. China -‐ With the slowdown in Chinese growth, the dissent emanating from the Chinese hinterland may become more of a problem. China may also become more belligerent in its disputes with adjoining nations prompting greater military cooperation amongst Japan, Pacific-‐Rim nations, and India. Most of these countries have had historical disputes with China. With the current US perspective, to take a back seat in the manner in which American power is projected abroad, Japan is likely to emerge as a more militarized nation. As in the case of the Mid-‐East, the US must have a clear strategy and engage, if not with boots on the ground but clearly with a more potent strategy than leading form behind. Climate Change -‐ According to George Friedman of Stratfor, the potential impact of climate change is not a core national issue that outranks economic, military or other key national policies for most countries. Thus, organizing a global, legal agreement at the U.N. Climate Summit in Paris in late 2015 will not be easy31. As we observed in the section on economy the overall Energy situation is likely to change. With American self-‐reliance, in conjunction with Canadian and Mexican oil and gas production capacity, the hotbed is likely to shift to Asia. The key clients for Middle Eastern and Russian oil & gas will be China and India. Considering that these nations have grown in their demand over the years and have sourced their energy needs form the Middle East without upsetting the geopolitical applecart it is likely this will continue. The Middle East could become “cooler” than before at least from the perspective of energy serving as a potential flashpoint. To recap, we have a belligerent China and Russia, both with considerable internal strife and serious economic issues and likely to continue their aggressive attitude towards their neighbors and the west. In the Middle East new power structures will start to emerge as the US has projected a “US First” less interventionist posture, with Turkey and Iran gaining more prominence. Energy related flashpoints in the Middle East are also likely to lessen.

International Affairs: What it means, probable scenarios and some solutions Based on research, the probability of events transpiring in the overall geopolitical and international affairs realm is as below: The chart below shows that, viewed in a holistic manner, there is a high probability the international affairs environment over the next decade may look like this with the specific underlying events, their probability of occurrence and impact. For e.g. this shows that there is more than Medium probability that the US will be more multilateral in its approach towards engaging in conflicts or any type of IA issues that has a net positive impact as has been seen in the past. There is also a high probability that EU integration and debt



problems will continue with a net negative impact. (Note: probabilities are approximations based on qualitative research. See Appendix for details).

1. The US must adopt a more engaging albeit multilateral posture collaborating with international institutions and moderate regional powers like Turkey in the Mideast in addressing international conflicts.

2. In the case of Asia, as mentioned above, the US must engage albeit in alliance with countries like India and Japan to keep Chinese belligerence in check.

3. International institutions like the UN, World Bank and IMF must have adequate representation in leadership including greater voting rights from rising global powers like China and India.

4. The US and NATO must consider Russian strategic concerns while not backing down from a clear posture of supporting the sovereignty of European nations. This may mean striking a deal with Russia on Crimea and limited deal on Ukrainian sovereignty, a la Finland during the cold war where the Finns compromised on their foreign policy by consistently maintaining neutrality.

5. The EU must move towards a more practical model and attempt greater fiscal integration. If this is not possible a stable EU construct should be put in place that prevents volatility, even if it splits the EU further along clear fiscal lines into a financial and non-‐financial union. Volatility must be prevented in the EU at all costs.

6. Whenever there is an opportunity to strike a deal as in the case of Iran the US and the P5+1 nations must grasp that opportunity to make the world a safer place as opposed to allowing the status quo to continue with an all or nothing perspective.



Conclusion -‐ Putting it all in perspective

We started this journey with the premise that we are in a similar type of period as that vile period in the early 20th century that caused so much turmoil. So what, what does it all mean? Everything hinges on two questions: Whether issues facing us today are comparable in severity to similar issues from the past period; and whether we will deal with issues more maturely this time around to make the “Crisis” turning a peaceful one? The answer is yes to both, with some minor caveats. Looking at everything that is unfolding, we can be certain of one thing, the economic situation (judging by fundamentals) is eerily similar to the 1929-‐1945 period. Some of the intense impact may have been avoided after the crash of 2008 due to quick intervention of the Fed but the fundamentals are behaving similar to the past period. Socio political environment, it would seem, is simmering with dissatisfaction under the surface in many regions, especially due to wage inequality, but it is yet to bubble over. The arena of geopolitics and international affairs continues to have flashpoints but nothing has degenerated to a point of no return. While this study makes no claims to forecasting backed with perfect empirical analysis, I have attempted to show, with the help of probabilities based on qualitative analysis, what might transpire. So, should we cower and lose hope? Not really, because according to several scholars, we are, living in the safest period of human history with greater opportunity for progress than ever before. Less crime, disease, more opportunity and greater interconnectivity trump inflammatory headlines. We also have the power of international institutions with proven success like the UN and financial stabilizers like the World Bank and IMF that are ready to intervene in case of disruptions, something we did not have in the past period. What are some of the things we can do to ensure peace and prosperity? At a high level the solutions suggested in each section can be boiled down to the following: - Coordinated global economic management with the US Fed ensuring liquidity in the

markets and being extremely careful about the domestic and international impact of rate increases and other policy measures.

- Greater investment in social development programs and concrete steps towards ending wage inequality.

- Concrete collaborative steps towards reducing global debt including some debt resets, and a combination of new possible gold pegs and reevaluation of reserve currency or using currencies like IMF’s Special Drawing Rights (SDRs).

- Enhanced voting power to growing powers like China and India in international institutions like UN, World Bank and IMF.



- Greater US engagement on international issues with a multilateral perspective and a “Scalpels not Broadswords” type projection of American power.

In essence we can change the outcome of the fourth turning with the above, but we must tread very carefully to ensure that the end to the fourth turning is not a violent and tumultuous one.



Appendix

Economic Scenarios (Next 10 years) (Likelihood – Medium) (Likelihood – High) (Likelihood – Low) - US govt. eases Dodd Frank allowing better availability of liquidity, sub-‐optimal but better than before.

- A steady growth of 2% for the US.

- Markets suffer corrections. - The US central bank delays but eventually makes very minor rate hikes.

- European markets and emerging markets have room to recover.

- Dollar strengthens. - Over time slow growth due to several commodity shocks and demand growing slowly.

- Despite contenders USD remains world’s reserve currency.

- Growth in EM especially India picks up.

- Emg Mkts pull west out of the doldrums.

- World safe from a prolonged deflationary recession

- Overall low interest rate environment for US and most developed nations.

- Climate change related costs increase.

- Some traction on global emissions regime.

- A few severe commodity shocks leave the USD stronger than before.

- More Iranian crude coming into the supply side, demand down, oil and commodities slide further.

- Capital flight to quality towards US and away from Europe and emerging markets.

- Exports suffer due to higher dollar, - China and Europe in a recession. - US markets suffer a correction, this time taking longer to recover.

- US growth slows further with US on the verge of a recession.

- Demand for US debt falls. - Global debt reset, a major issue. - Multiple reserve currencies emerge.

- Asian economies including China recover.

- Asian contemporary of the World Bank gaining in strength.

- US still the “top game in town”, in spite of low growth for many years.

- Over time US pulls up with +ve GDP.



- Oil plunges after Iranian sanctions lifted and weak global demand. Dollar rises

- Chinese and European recessions plunge the world into a global deflationary recession.

- Severe fall in commodities. - Fed raises interest rates, markets and the economy slumps, a la 1937/38 (see above).

- Market liquidity problems due to regulations.

- US GDP growth –ve. - Debt hamstrings any monetary stimulus.

- Global debt reset. Unsure about exactly how it may play out. Maybe a combination of reversion to Gold standard and IMF designated SDRs (Special Drawing Rights).

- Treasuries lose value as among other reasons, foreign demand for USTs falls.

- Eventually EM growth leads the world out of a recession.


- No agreement on global emissions regime.



Socio-‐Political Environment Scenarios (Next 10 years) (Likelihood – Low) (Likelihood – Medium) (Likelihood – Low/Medium) - Democrats win in 2016, liberal wave continues.

- New Supreme Court justice a liberal appointed after one more retires.

- Greater marijuana legalization. - Action against mass incarceration. New laws proposed

- More power to women. - Greater attempt at rapprochement with Iran, more collaboration and less direct intervention.

- More infrastructure, education and scientific spending.

- Immigration reform, “Dream” act passed.

- Democrats win in 2016, liberal wave continues.

- New Supreme Court justice a liberal.

- More tax reforms, with greater redistribution of wealth.

- Some legalization of marijuana. - Action against mass incarceration. New laws proposed

- More power to women. - Aggressive minimum wage hikes and infrastructure spending

- Greater US engagement in the Middle East.

- Greater fiscal discipline. - Modified Dream act passed.

- Republicans win US presidency in 2016, liberal wave stopped, country goes markedly conservative.

- Some legalization of marijuana.

- Some action against mass incarceration.

- New Supreme Court justice, a conservative appointed.

- Very aggressive stance vis a vis foreign policy, key members of George W administration back in different posts.

- Greater troop commitments abroad.

- High fiscal discipline, no additional taxes for rich.

- Some corporate tax reforms. - Modified Dream act passed.



International Affairs Scenarios (Next 10 years) (Likelihood – Low (Likelihood – High) (Likelihood – Medium) - US engages in greater collaboration and negotiation.

- US and Russia reach a settlement on many fronts especially Crimea,

- Some sovereign compromises on Ukraine.

- Russian economy recovers. - Asian pivot works. China gets less belligerent in Asia.

- Japan does limited militarization.

- Iranians reach a solution on nuclear accord. Easing of Iranian sanctions.

- Iran shows clear signs of economic progress and some social openness

- ISIS reduced in size, Iraqi leader pacifies Sunnis and Shias provides greater representation for all.

- Kurdistan separates. - Some friction between EU monetary union and other members but union remains stable.


- US sends limited Special Forces type assistance to Middle East.

- Iranian nuclear deal signed, sanctions lifted.

- Oil prices fall. - Over time Iran plays the nuclear card to ask for special concessions.

- Greater social development in Iran. - Turkey plays a key role in ME stabilization collaborating with US, Gulf States and EU.

- Special deal with Russia on Ukraine, with some compromises on Ukraine sovereignty in terms of foreign policy.

- Internal discord in China, some symbolic change in human rights policy.

- Japan does multiple military exercises with other Asian countries.

- Severe splits in the EU. - EU debt problems persist. Coordination by ECB manages to contain contagion.

- Afghanistan remains stable with some US troop presence, no more withdrawals.

- ISIS eventually defeated with a 3 state Iraq.


- US commits more than a division of ground troops to the Middle East to push ISIS back.

- US administration creates hurdles in full implementation of Iran deal.

- 3 way split of Iraq. - Putin’s annexation of Crimea complete, more aggressive demands regarding Russian-‐speaking areas in Ukraine.

- Turkey starts playing a key role in Middle Eastern stabilization albeit aggressively and independently.

- Severe splits in the EU with greater friction within monetary union as rich nations seen to subsidize poorer and less responsible ones.

- Britain asks for special status as a relative outlier in the EU.

- China gets more belligerent, engages in more cyber attacks at western targets.

- Japan militarizes openly and aggressively.

- Taliban captures power in Afghanistan, with massive backing of Pakistani army.

- No agreement on global emissions regime.



1 Fed tightening is like 1937, http://www.businessinsider.com/ray-‐dalio-‐fed-‐tightening-‐is-‐like-‐1937-‐2015-‐3, March, 2015 2 William Strauss and Neil Howe, The Fourth Turning, New York: Broadway Books, 1998 3 William Strauss and Neil Howe, The Fourth Turning, Pg. 123-‐138, New York: Broadway Books, 1998 4 The Sixth Kondratieff -‐ Long waves of prosperity, https://www.allianz.com/v_1339501901000/media/press/document/kondratieff_en.pdf, January, 2010 5 Kondratieff Waves and the Greater Depression of 2013 – 2020, http://www.financialsense.com/contributors/christopher-‐quigley/kondratieff-‐waves-‐and-‐the-‐greater-‐depression-‐of-‐2013-‐2020, February 2012 6http://static.visionofhumanity.org/sites/default/files/Global%20Peace%20Index%20Report%202015_0.pdf. 7 http://www.systemicpeace.org/conflicttrends.html. 8 http://www.hiik.de/en/konfliktbarometer/pdf/ConflictBarometer_2014.pdf. 9 China’s stock plunge scarier than Greece, Ruchir Sharma, Wall Street Journal, http://www.wsj.com/articles/chinas-‐stock-‐plunge-‐is-‐scarier-‐than-‐greecechinas-‐stock-‐plunge-‐is-‐scarier-‐than-‐greece-‐1436309780, July 7, 2015 10 How the next financial crisis will happen, Stephen Schwartzman, http://www.wsj.com/articles/how-‐the-‐next-‐financial-‐crisis-‐will-‐happen-‐1433891718, June 9, 2015 11 Facts about the minimum wage, http://www.pewresearch.org/fact-‐tank/2015/05/20/5-‐facts-‐about-‐the-‐minimum-‐wage/, May 20, 2015 12 http://www.fns.usda.gov/pd/supplemental-‐nutrition-‐assistance-‐program-‐snap 13 Top 10 trends of 2015, http://reports.weforum.org/outlook-‐global-‐agenda-‐2015/top-‐10-‐trends-‐of-‐2015/, 2015 14 World Employment and Social Outlook - Trends 2015, http://www.ilo.org/global/research/global-reports/weso/2015/lang--en/index.htm, January 2015 15 The End Game, Raoul Pal, http://www.businessinsider.com/raoul-‐pal-‐the-‐end-‐game-‐2012-‐6#-‐1, June 1, 2012 16 The future of public debt: prospects and implications, http://www.bis.org/publ/work300.pdf, March 2010 17 Back to Mesopotamia?: The Looming Threat of Debt Restructuring, http://www.bcg.at/documents/file87307.pdf, 23 September 2011.



18 The Problem With a Euro Fix: What’s in It for the Dutch?, http://www.nytimes.com/2015/07/11/upshot/the-‐problem-‐with-‐a-‐euro-‐fix-‐whats-‐in-‐it-‐for-‐the-‐dutch.html?abt=0002&abg=1, July 10, 2015 19 The Geopolitics Of Energy, Robert Kaplan, http://www.forbes.com/sites/stratfor/2014/04/04/the-‐geopolitics-‐of-‐energy/, April 2014 20 What Are the Economic Consequences of Climate Change? http://www.theatlantic.com/business/archive/2014/04/the-‐economic-‐case-‐for-‐acting-‐on-‐climate-‐change/360995/, April, 2014 21 Looking for bubbles – a statistical approach, http://www.cmgwealth.com/wp-‐content/uploads/2014/05/GMO_QtlyLetter_1Q14_FullVersion.pdf, 1st Qtr, 2014 22 The mass incarceration problem in America, https://news.vice.com/article/the-‐mass-‐incarceration-‐problem-‐in-‐america, July 16, 2014 23 Clinton Begins The 2016 Campaign, And It’s A Toss-‐up, http://fivethirtyeight.com/features/clinton-‐begins-‐the-‐2016-‐campaign-‐and-‐its-‐a-‐toss-‐up/, April, 2015 24 A Historical Hurdle to a Democratic ‘Third Term’ in 2016?, http://blogs.wsj.com/washwire/2015/03/20/a-‐historic-‐hurdle-‐to-‐a-‐democratic-‐third-‐term-‐in-‐2016/, March, 2015 25 The Electoral Cycle favors the GOP in 2016, http://blogs.lse.ac.uk/usappblog/2014/04/14/the-‐electoral-‐cycle-‐favors-‐the-‐gop-‐in-‐2016/, April 2014 26 A net assessment of Europe, Geopolitical Weekly, https://www.stratfor.com/weekly/net-‐assessment-‐europe, May 26th 2015 27 What would happen if Britain left the EU?, http://www.theguardian.com/politics/2015/apr/19/what-‐would-‐happen-‐if-‐britain-‐left-‐the-‐eu-‐consequences-‐of-‐exit, April, 2015 28 Zbigniew Brzezinski Remarks, http://csis.org/files/publication/150318_Brzezinski_Remarks.pdf, March, 2015 29 Geopolitical risks – 2015, http://time.com/3652421/geopolitical-‐risks-‐2015-‐ian-‐bremmer-‐eurasia-‐group/, January, 2015 30 https://www.stratfor.com/forecast/decade-‐forecast-‐2015-‐2025 31 When It Comes to Climate Change, National Interests Outweigh International Mandates, https://www.stratfor.com/image/when-‐it-‐comes-‐climate-‐change-‐national-‐interests-‐outweigh-‐international-‐mandates, January, 2015

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