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  • The Geopolitics of the United States, Part 1: The Inevitable Empire

    We all remember junior high geography (well, some of it, anyway). But somehow it didn't cover how critical geography is in the development of a nation... and that it is, for example, the primary reason the United States became a global power. The territory of the U.S. simply comprises all the right geographic elements to make its occupants an inevitable global force. Yesterday, STRATFOR, my favorite source for geopolitical analysis of world affairs, published The Inevitable Empire, part I of a fascinating assessment of the United States. In it you'll learn how geography shaped the nation's behavior throughout history, and what it means for U.S. foreign policy today. It's a perfect example of the kind of insight STRATFOR provides that you won't find anywhere else.

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  • The Geopolitics of Brazil: An Emergent Power's Struggle with Geography

    Just last week in Thoughts from the Frontline, we discussed the relative valuations of emerging markets. Any discussion of an emerging market is incomplete without understanding the underlying geopolitical forces that guide behaviors of countries and often predetermine the outcome of events. Today I'm sending you STRATFOR's geopolitical analysis of Brazil, a much-discussed emerging market. This is a long read, but it's the most thorough and enlightening analysis I've seen thus far on how the continent's geography has shaped Brazil's history to date, and the major challenges the the country faces today. Hint: Brazil's biggest problems are an overvalued "real," Mercosur, and an Asian giant (you guess which one...).

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  • Germany's Choice: Part 2

    For today's special edition OTB, let's turn our fiscal eye across the pond to all that's going haywire in Europe. But not the continent's banking crisis, per se. Today's piece takes a broad look at who's really running the show. I'll give you a hint - they've done it before, and it wasn't too long ago. The folks at STRATFOR (a global intelligence publication) have spent the better part of two years saying that Germany will run Europe. The newly redesigned EFSF (European Financial Security Facility) can be considered concrete evidence of such.

    From Berlin's point of view, the Eurozone is its sphere of influence, and its preservation is in Germany's national security interest. It's a new Europe, where Germany's not just the checkbook anymore, but holds some reins.

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  • China Security Memo: Looking into 'Reverse Mergers' on Wall Street

    The saying goes that you can learn something new every day. If you're paying attention that is - and more importantly if you know where to look. Today I was getting my morning fill of geopolitical intel from my friends over at STRATFOR (on everything from personal security to country economic profiles) and stumbled onto their weekly China Security Memo, this particular edition on Looking into Reverse Mergers on Wall Street. Is this another head-scratcher in the less-than-conventional foreign policy coming from China or a regulatory end-around by some enterprising Chinese companies?  Take a few minutes to read this report, which also goes through everything that happened in China this week that matters.

    This article discusses the SEC's ongoing investigation of the "reverse mergers" where questionable Chinese auditing allowed companies to list on U.S. stock exchanges despite their fraudulent accounts. The report is a superb example of the detail and insight STRATFOR gives its customers. If you're into the idea of learning something new on a daily basis (the desire grows with age, I believe...) you'll enjoy learning about the current state of Chinese regulations (or lack thereof) for companies that list on US stock markets, State-Owned Enterprises (SOEs) that compete with American businesses, recent bank robberies, tensions with the Catholic church, and bottled water contaminated with E.coli. In other words, you'll definitely meet your novel knowledge quota for the day, all while getting the deepest insight on the security situation in China.

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  • Chavez's Health and Implications for Chinese Investment

    For those of you keeping up with the much-discussed energy deal between China and Russia, you know the many reasons, both geographic and political, why it's unlikely to pan out. The geopolitically savvy folks over at STRATFOR told us about it a couple of weeks ago, and have moved their forecasting on to an existing energy relationship, between China and Venezuela—now potentially uncertain due to Hugo Chavez's precarious position in a Cuban hospital.

    Whether Chavez gets better or not, a political transition is down the line somewhere, and China could lose its current preferential treatment as primary investor in Venezuelan oil. This is the kind of thing we have to know about as investors. Yes, we all know that Chavez is ill. But what, if anything, does that mean for the South American energy sector? What about the future of oil, China, the U.S., and so on? This is the kind of forward-looking analysis you get from a news publication like STRATFOR. It doesn't get any better than these guys.

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  • Portfolio: Obstacles to a China-Russia Energy Deal

    They say that natural gas is a more dynamic study in geopolitics than oil. Yes, petroleum is what makes the world go 'round. But, once you get it to a super-tanker, and you can ship it anywhere. Natural gas, of which the world consumes 3,000 billion cubic meters per year, is much harder (or more expensive) to transport. You have to build miles and miles of expensive pipeline to get it to your buyer. So whatever countries your pipeline runs through, or to—you'd better stay friends.

    Today I'm sending you a video by STRATFOR on the much-discussed potential energy deal between Russia and China. Ideology aside, the two countries would seem like a compatible couple (Russia is the world's largest exporter of raw commodities, China the world's largest importer). But are they ready to tie the knot with a pipeline that would takes decades and hundreds of billions of dollars to build?

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  • Visegrad: A New European Military Force, by George Friedman

    Today, I'm sending you a week-old article. Fear not, dear reader—though the news peg is several days gone, the significance is historic... and when this author says "pay attention," I do. Today's piece is from my friend George Friedman, founder & CEO of STRATFOR.

    During the week of Palestinian protests and the IMF scandal, George chose to write about an obscure decision by Poland, Slovakia, the Czech Republic and Hungary to form a battlegroup. Though you may wonder why, we're all about to care about the Visegrad Group.

    The decision revolves around the new reality of a resurgent Russia, a weakened Europe and a fractured NATO. I don't think you'll wonder why you should care about Russia, Europe and NATO.

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  • U.S.-China Strategic and Economic Dialogue

    A true understanding of geopolitics (and therefore geopolitical risk) is an essential piece of the puzzle in managing investments wisely. You're bright people, I know. If you need to know what's going on in China to inform your investments, you...
  • Iraq, Iran and the Next Move

    For those of you that have read about my new book, Endgame, you know I make the point that, while there are no good options for dealing with the debt crisis, the worst choice of all is doing nothing. In today's Outside the Box, you'll see a similar argument—but this "lesser of two evils" situation deals with the U.S. troop withdrawal from Iraq, and the ever-present Iranian push to dominate the Persian Gulf region.

    George Friedman—my friend, and founder of STRATFOR, a global intelligence company—discusses the potential "bad options" the U.S. has in its attempt to rein in Iran, and arrives at what he considers the least detrimental: negotiation. The worst of course is doing nothing, thus allowing Iran to increase its hold on the entire region—a region on which the global economy is dependent for its oil... You can see why all this matters.

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  • STRATFOR's 2011 Second Quarter Forecast

    I always look forward the beginning of a new quarter, because it gives me a chance to read STRATFOR's update of their annual forecast, which I shared with you in January. Their quarterly forecast explores developing geopolitical trends in each region of the world.  In recent months and quarters I've noticed a much wider recognition in published discussions of "geopolitical risk" as it relates to investments.  Of course geopolitical risk is nothing new to my long-time readers who've been plugged into STRATFOR for years.

    This Q2 forecast is a long read, but it addresses everything from China's battle with inflation, to Russia's economic opportunity, to the stalemate in Libya's civil war. They do a fantastic, and usually spot-on, job of telling you what to look out for.  (And when they aren't spot-on, they're up-front about what they missed and why).

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  • What Happened to the American Declaration of War?

    You're probably aware by now that I'm an avid reader of the global intelligence company STRATFOR. But this piece by their founder George Friedman is truly exceptional.  If you're an American voter, interested in politics, or anyone interested in or affected by U.S. military actions (in other words, everyone), you should read this article. Why has no one else asked this question? And, as George points out, if this one part of the Constitution can be so repeatedly and publicly ignored by Congress and the president, what's next?

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  • Japan, the Persian Gulf and Energy

    The Prime Minister of Japan recently stated that his nation was facing its worst crisis since World War II. While most of the world is focused on tragic images of floodwater and rubble, and fixated on radiation levels, there is a bigger picture to be examined – one that also includes  energy, coal and the Strait of Hormuz.

    Human nature draws our focus to the present. We look for immediate repercussions to a devastating world event. But the real advantage lies in understanding the broader perspective. In order to get this deeper understanding, you could choose to spend endless hours scouring global new sources day and night, constantly questioning their legitimacy and bias. Or you could take a better approach and hire a team of geopolitical experts and uber-intelligent analysts.

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  • The Complexity of Persian Gulf Unrest

    While the world's attention was (and still is) on the fighting in Libya, George Friedman—founder of a global intelligence company called STRATFOR—told his employees to watch the tiny island of Bahrain. Libya's protests are more violent, but the unrest in Bahrain, he said, will have much stronger strategic implications.

    It's easy to look at the news event that makes the most noise (and makes for good television). It's much more critical to pay attention to the event that, depending on its outcome, could disrupt the world economy. If unrest in Bahrain gets out of hand, Saudi Arabia's Shiite minority could follow suit with protests of their own, and the Iranian-Saudi balance in the Persian Gulf could teeter heavily toward Iran. Imagine if Iran fully controlled the area through which 40% of the world's seaborne oil must pass daily. Does Bahrain have your attention now?

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  • Intelligence Guidance: The Situation in Egypt

    When protests started in Egypt last week, mainstream news outlets cried "democracy!" and compared the situation in Egypt to the Berlin Wall and Tienanmen Square. Meanwhile, STRATFOR (an intelligence company I've followed for years) spoke of a different possibility.  At the time it may have been counter-intuitive for most institutions to draw parallels to 1979 Iran, but my friend and the company's founder George Friedman produced an internal document that raised that possibility.   Days later, news outlets began asking questions about groups like the Muslim Brotherhood, and realizing there could be other forces behind the unrest than simple calls for Western-style democracy.

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  • STRATFOR's 2011 Annual Forecast

    As you know, I'm an avid researcher when it comes to my own annual forecast, which you saw a couple of weeks ago. One of my favorite resources is STRATFOR, a global intelligence company founded by my friend George Friedman. Their focus is geopolitics, which means they cover political, economic and military developments all around the world. They have an annual forecast of their own, and George has been gracious enough to allow me to share it with you. As long-time OTB readers may know, STRATFOR's annual forecast can be very provocative.

    Here are some examples of this year's themes:

    - The U.S. is unlikely to withdraw from Iraq as promised in 2011.
    - The U.S. economy will grow.
    - In Europe, more countries will need bailouts. (A couple of names might surprise you.)
    - Russian-German relations will strengthen.
    - Japan will rot, but it will rot in seclusion.

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