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“Today, we pay tribute to the pagan god of token environmentalism by spending countless hours recycling paper.” -Bjorn Lomborg, Adjunct Professor at the Copenhagen Business School, writing in July/August 2012 Foreign Affairs, “Environmental Alarmism, Then and Now.”

Headlines & Of Interest

10 Reasons Countries Fall Apart (Foreign Policy)
Egypt: O brother, where art thou? (Asia Times; Pepe Escobar)


We get a sense global liquidity is draining back to the center from the periphery. We know we are not alone in this view, as many have warned about the European banking system’s deleveraging globally i.e. reducing loan exposure. Add in the tepid global growth environment with all three wagon pullers–US, Europe, Asia–now struggling, and we have the recipe for a systemic event. Though the Eurozone is ground zero for triggering such risk, especially now that Chancellor Merkel (rightly so) ruled out debt sharing, it is quite possible the catalyst could be an emerging market economy first, and Eurozone second. Any EM event will likely trigger even faster global deleveraging from the private sector, including those investors who continue to be sold the fantasy that EMs have decoupled.


Technically, we think a longer term top is in place; made back in 2007. If we see some contagion in EMs, the next leg down could be swift and deep!