Emerging, maturing, protesting markets … At the beginning of this year, Eurasia Group, the political risk firm I lead, released its top 10 risks of 2013. We forgot to put Pepsi-guzzling whistleblowers on the list, but we did give our top slot to increasing turmoil in "emerging markets." In a global economy that has become more reliant on countries whose economies are vulnerable to political shocks, emerging markets are our new economic fulcrums. What is causing this growing uncertainty in emerging markets? How much stress can they take without upsetting the balance for everyone else. The protests in countries like Brazil and Turkey are not Arab Spring-style uprisings: they're the anger and frustration of newly empowered middle and lower-middle classes, the same consumers who were the catalysts and beneficiaries of this growth in the first place. – Reuters
Dominant Social Theme: Revolutions are spontaneous.
Free-Market Analysis: Anyone who has been following the alternative media over the past years knows that the various "youth" revolutions in Africa and now in the Middle East are controlled and sponsored. The US in particular has had a hand in these agitations and various agencies have reported on it.
So when we look at the agitations in Brazil and Turkey, we must ask ourselves if these are totally spontaneous. The answer, of course – as we pointed out in a previous article – is that both of these countries have apparently been sympathetic to Vladimir Putin's stance regarding Syria, which is to resist the West's attempts to undermine the current government.
The West has been busily installed Islamic Republics throughout Africa and the Middle East and it is certainly feasible to speculate that the instability in Brazil and Turkey is not entirely spontaneous. Why Brazil and Turkey? Are these the only developing countries that participate in the "new economic fulcrum" this article mentions.
In emerging markets, politics have at least as big an impact on market outcomes as the underlying economics — that's why these kinds of protests can strike seemingly out of the blue, and bring business-as-usual to a halt. Compare the impact of protests (and leaders' responses) in Brazil and Turkey to the Occupy Wall Street movement.
In a developed country like the United States, the political system is consolidated in a manner that forces fringe movements to choose one of two paths: go mainstream or lose steam. In emerging markets that have experienced dramatic and rapid changes, governments can't keep up with citizens' evolving demands.
Protests are far more likely to swell, with severe economic ramifications. Why are the protests in Turkey and Brazil happening? There are immediate triggers. In Brazil, it was a small raise in bus fares; in Turkey, it was the imminent demolition of sycamore trees in Gezi Park.
… What's happening now is, despite how it looks, a sign of emerging markets' maturation. Even though the protests themselves are about radically different things, all of them are about strengthening the rights of the body politic and airing grievances surrounding governments' inadequate responses to change.
This is how emerging markets become developed ones — democracies have to be shaken before they strengthen. (Assuming, of course, that the leaders respond by reforming rather than strong-arming.) But despite this broad trend across many emerging markets, if there is one thing that is finally becoming widely understood, it's that emerging markets are not a homogenous asset class.
Democracies have to be shaken before they strengthen?
Well … who is doing the shaking?
It may be that the agitation in Brazil and Turkey is spontaneous. But if one wants to analyze these movements, does it not make sense to include the upheavals throughout Northern Africa? And some of those upheavals are plainly orchestrated.
Perhaps the world is being shaken by a bigger plan. You wouldn't know from reading this.
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