Geopolitical economic advisor Christian Takushi, known in Switzerland for his contrary viewpoints and perspectives, drew a future scenario laden with risks and harsh realities in an interview with finews.com.
«The Western’s view of the Ukraine war is not the only one,» Christian Takushi said at an event by Union Bancaire Privée in Zurich on Wednesday. In the last UN resolution against Russia, 82 countries abstained or voted against excluding Russia from the Human Rights Council, despite massive threats.»
«We should not threaten or give orders from above to such important countries. This comes across as undemocratic and colonial,» he said.
Just Printing Money
Among the abstentions were many economically important and populous countries such as India, Brazil, South Africa, Mexico, Egypt, Saudi Arabia, Pakistan, Thailand, Malaysia and Indonesia.
«The West is isolated as never before,» he said. Yet, the reason for this is not because other countries don’t condemn Russia's aggression: «Many of these countries have been disgruntled with the West for years, observing that we have been living beyond our means for decades at their expense – hopelessly over-indebted, we just print money to pay our deficits and bills for imports.»
Alarm Bells
The harsh sanctions on Russia, such as excluding it from the SWIFT payment system, have raised alarm bells among elites in other countries, who are now thinking about how to prepare for a similar eventuality and are looking at ways to cooperate with each other,» Takushi said.
«I've been warning politicians and companies for more than a decade not to depend on authoritarian and undemocratic countries,» he said. Only to hear that conflict was impossible due to trade and international interdependence, he added.
Europe’s Self-Made Trap
«This has proven to be a mistake and Europe in particular, has set a trap for itself,» he said, adding that «Europe is dependent on Russia for raw materials and on China for its supply chains.» Now there are problems on both sides, which after years of printing money has resulted in fanning inflation, which is now rising sharply.
«Central banks and governments find themselves in a dilemma, which they can’t get out of. Interest rates have to rise despite enormously high debt levels, and that will have consequences for the entire economy and for consumers.»
Deflate Valuations
For more than a decade, the West has responded to every crisis by easing monetary policy. That is now backfiring. «The money went to corporate profits and inflated valuations in all asset classes. It did not benefit the real earnings of the broad population. In America, only the top one percent of households are better off in terms of income than they were in 1980,» he said.
Although monetary policy has staved off a recession in recent years, the tradeoff is not working anymore, he said. «You can't get a handle on 10 percent inflation with one percent interest rates. You have to choke off demand and deflate valuations.»
No Interest in Ending the War Quickly
This is why the war in Ukraine and the current geopolitical situation play right into the West's hands: It helps contain the pent-up enormous inflation potential within the G7.
«The war is disrupting investment and stifling demand. In the current situation, economically, the West has no interest in ending the war quickly, and I fear a protracted conflict,» he said.
Christian Takushi is a geopolitical-economic advisor and was one of the few analysts in 2016 to predict both Brexit and Trump's election. Previously he worked as a strategist and a fund and portfolio manager at institutions, including Swisscanto, BCV and Credit Suisse.
