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Coming Civil Wars

An article yesterday titled ‘IMF Chief Warns Of Civil Wars Around The World’ – reading time 2 minutes – reports International Monetary Fund Head Dominique Strauss-Kahn as warning the current “unstable and varied nature of the global recovery could lead to civil war within countries” – with the potential for conflict related to high unemployment rates and large numbers of workers entering the workforce, and the “structure of the global economy” where the U.S. is being relied on for consumption with China and Germany “exporting their way to success”.  Struass-Kahn is further reported as saying “as tensions within countries increase, we could see rising social and political instability within nations – even war”.

The IMF, established in the mid-1940’s with now 187 member countries, is a specialized agency of the United Nations that has its own charter, governing structure, and finances.  The IMF monitors the world’s economies, lends to its members who find themselves in financial difficulty, and monitors the financial and economic policies of its members.

It strikes me the foregoing statements are unusually strong for a Head of the IMF to make.  This in circumstances where whether you like or dislike the IMF mandate or its policies, it seems to me that (1) it is hard to take a position that the IMF is not a continuous vested interest observer of world and country-specific economies, and (2) that while the IMF may have its own agenda it is one step removed from, and hence likely has a more informed and balanced view on those things, than individuals and individual countries with individual agendas and individual vested interests.

I note with interest the IMF Chief’s focus on unemployment and workers (presumably to a large degree young workers) entering their country workforces with interest – and see this as entirely consistent with my frequently expressed views to readers of e-mails I send each trading day to Subscribers to Stock Research Portal (a Resources Research website) that (1) you can’t take things away from people and leave them happy – which speaks to food shortages and declining lifestyles, and (2) youth unemployment is a big and fundamental deal for all countries (not the least of which is the U.S.) that needs to be addressed immediately on a prioritized basis.

A PowerPoint Presentation accompanies the article which highlights the eleven countries it suggests are “At Risk of Becoming The Next Egypt” can be found at the bottom of the article – reading and review time 3 minutes.  These, with summary data and statistics presented for each, are Iran, Jordan, Libya, Morocco, Pakistan, Saudi Arabia, Syria, Vietnam, Venezuela, Yemen, and (I think surprisingly and ‘seriously doubtful’) China.  A second PowerPoint Presentation that follows the first is titled ‘The 25 Countries Whose Governments Could Get Crushed By Food Price Inflation’ – reading time 5 minutes.  This second Presentation shows GDP per capita in U.S.$, food as a % of total household consumption, and net food exports as a % of GDP for each of the twenty-five countries highlighted.  The countries listed include China (again I think surprisingly and ‘seriously doubtful’), Hong Kong (again I think doubtful), India, Pakistan, Romania, and Ukraine.

I found the referenced article interesting, and each of the two referenced Presentations worth thinking about in the context of my equity and commodity investments and investment strategy.  Accordingly, I recommend them to readers.

Interestingly, a second article yesterday titled ‘IMF Is Solution to Global Crises – Strauss-Kahn’ – reading time 2 minutes – describes Mr. Strauss-Kahn as “one of the more brutal and obvious functionaries of the power elite” who “intends to capitalize on the current Middle Eastern turmoil for the benefit of his (NYSE:IMF) agency”.  The term ‘Power Elite’ assumes or puts forward as a fact (or the factual basis of an argument) that wealthy/well connected groups or individuals seek to expand their wealth and influence by applying/promoting dominant belief systems that become accepted through repetition. I have little doubt that many people and organizations act out of self-interest – and think and act accordingly.  That said, I think it ‘over the top’ to think any IMF Head would openly discuss matters of serious international socio-economic consequences in a disingenuous or cavalier way.  Irrespective of the views of others toward Mr. Strauss-Kahn (positive or negative), I for one believe his views to be worth thinking about in an open-minded way.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.