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The Politics of denial

Weekly investor research

01 July 2016

A politics of denial now governs decision-making in developed economies. It relies on a two-pronged strategy of postponement and scapegoating, but if allowed to go unchallenged may end up having far more serious consequences than merely victimising the least powerful in society. All stages of the politics of denial are already on display to various degrees across the developed world today with clear similarity to the politics in the aftermath of the Great Depression in the 1930s. The ultimate destiny of the new politics is failure, but the death struggle may be long and could be violent. It is bad for investment in developed countries and it may have adverse consequences for EM too. However, current valuations, proven resilience and strong technicals suggest that EM assets will hold up in the face of the shocks arising from developed economies as they sink ever deeper into the twisted logic driving the politics of denial today.

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