Australia

Australia is a member in good standing of the Anglo-American alliance (UK, US, Canada, Australia, New Zealand). Rich in natural resources, it has benefited from development in Asia, particularly China. Australia is the driest inhabited continent on earth, making it particularly vulnerable to the challenges of weather and climate. Finally, as one New Zealander once mentioned, "we are dealing with long supply lines down under."

Brazil

Brazil is the “B” in “BRICS.” Brazil has pursued industrial and agricultural growth while taking advantage of its rich land and natural resources to become Latin America’s leading economy. It has a young population and a wealth of land and renewable water resources. A slow-down in Chinese growth and the fall in commodity prices has impacted Brazil’s economy, including its mining sector.

Canada

Canada is rich in land and natural resources. The Canadian economy is highly integrated with the United States, with which it shares the world’s longest unfortified border. It must grapple with the politics of a francophone Quebec and managing the distances of its territories (Canada has a population of approximately 4 people per square km, compared to 8 for Russia, 33 for the US and 147 for China) and the environmental impact of developing diverse energy resources. As with most of the countries in the developed world, it faces the challenge of managing an aging population.

China

China is shifting from a centrally owned and planned economy to a more market-oriented economy. Its growth has been significant since the 1990s. China’s GDP surpassed Japan’s in 2001 (Japan is now fourth behind India) to become the second largest global economy and then surpassed the US in late 2014 to become the world’s largest economy. Coincidentally, this is a status it enjoyed more than a century ago prior to the industrial revolution.

China’s challenges are:

• Managing the world’s largest population.
• Dealing with the environmental stress of rapid industrialization and growth.
• Rebalancing its economic relationships with the US and Europe as internal consumer markets grow.

Recommended: Solari Report Interview with Steve Roach on his book on the rebalancing of the US China trade, Unbalanced.

Steven Roach’s statistics on the rebalancing which is currently underway between West and East are compelling:

"The United States, with only 4.5 percent of the world’s population, spent $10.7 trillion on personal consumption in 2011, accounting for 17 percent of global consumer demand. U.S. consumption is nearly 35 percent larger than pan-European consumption, even though Europe’s population is slightly larger than that of the United States. It is four times that of China and India combined, even though those countries account for close to 40 percent of the world’s population, nearly nine times that of the United States."

Roach, Stephen (2014-01-28). Unbalanced: The Codependency of America and China (p. 10). Yale University Press. Kindle Edition.

As emerging market consumers begin to increase their share of global consumption, less of their savings may be available to buy government bonds. And these bonds finance subsidies which support the continued consumption of Westerners.

Look at the number of Chinese who now have a smart phone and are on the Internet. The growth of the Asian online market, surpassing the US and Europe in size is a recent phenomenon. This is a profound change – and it has just begun.

France

France is a player. It is a permanent member of:

• The United Nations Security Council
• NATO
• The G-7
• The G-20
• The EU

One of the goals of the creation of the European Union was to achieve the economic integration of Europe by combining France and Germany into a common market and currency.

France’s leadership in nuclear technology has provided relative energy independence. France also enjoys a high percentage of arable land while their leadership in fashion, fine food and wine commands a surprising share of equity value in global financial markets.

Germany

Germany is Europe’s economic powerhouse with a strong base in manufacturing and technology.

The decline of the USSR and the end of the Cold War allowed for German unification in 1990. Since then, Germany has expended considerable funds to bring Eastern productivity and wages up to Western standards.

Recommended Solari Report Interviews:

• Russia and the Ukraine Backstory with Anne Williamson
• The Oil Card – What’s Next? with Jim Norman

In January 1999, Germany, France and nine other EU countries introduced a common European exchange currency, the euro.

A critical geopolitical question is whether Germany will remain part of an integrated European Union in closer alliance with the Anglo-American countries or draw closer to Russia and China as Eurasia develops.

Russia, which supplies approximately 25% of gas demand for continental Europe and as much as 50% of Germany’s demands, would benefit from access to German technology. The United States is particularly concerned regarding a potential German-Russian alliance. Hence, the importance of recent developments with NATO, the Ukraine and “pipeline politics.”

Germany’s population has the second highest median age within the G-7 after Japan: 45.9 years.

India

India is the “I” in “BRICS” – its economy is the third largest in the world. India has 1.3 billion people, slightly less than China’s 1.4 billion. That is a lot of people. Approximately two thirds of India’s population is rural. That compares to approximately 45% for China, 16% for the US and 7% for Japan. This, in part, explains why India’s GDP per capita is less than half of that of China’s.

Indians have traditionally been small farmers. The WTO’s efforts to industrialize global agriculture have come to a grinding stall in India, marked by rising farmer suicide rates and political opposition, contributing to the failure to date of the WTO’s Doha round.

Highly Recommended: Sir James Goldsmith's Globalization Warning

India is currently in a period of growth. In part, G-7 alliances with India are designed to offset the growing power of China. India has numerous advantages including significant arable land and a population with a young median age.

The country’s challenges include building an infrastructure to support a modern economy and to lower their high poverty rates.

Italy

As with the other Southern nations in Europe, the creation of the European Union has not been to Italy’s advantage. Following Japan, Italy is struggling with the second highest debt load in the G-7 (133% of GDP) as well an aging population.

The Vatican is a separate, sovereign state located within the city of Rome. Who knows what it might do to Italy’s financial statistics if the Vatican were integrated into this data!

Japan

Japan, the fourth largest national economy in the world, faces tough geography and demographics.

The country is dependent on imported fossil fuels and the Japanese median age is the highest of the G-7: 46.2 years. Japan also has a frightening amount of debt per capita: 226.1%. Add to these issues the ongoing crisis surrounding Fukushima. And finally, there is the insecurity of being a small nation who must manage tensions in the South China Sea with numerous neighbors including two that have nuclear arsenals: China and North Korea.

Japanese science, technology and engineering continue to astonish and accomplish amazing things. During 2014, a Japanese company announced plans to complete a space elevator by the year 2050. Who knows – perhaps all of us traveling to the moon will have to land in Tokyo before rising to the suborbital platforms.

Mexico

As the Bretton Woods global “free market” system frays (or perhaps even unravels) expect to see North American outsourcing move closer to home by switching to Mexico. Indeed, the economic integration of the United States and Mexico continues, regardless of what the politicians say.

I believe that part of this integration is financed with narcotics trafficking. The US opens its markets up to drugs and this, in turn, finances its acquisition of land, real estate and equity investment in Mexico. This means that there is little political incentive to rein in the drug cartels but plenty of cash-flow to build out additional US infrastructure in Mexico.

The direction of US immigration is clear from looking at the median ages of Mexico and the United States. The US median age is 37 and Mexico’s median age is 27. By encouraging the immigration of young people from Mexico, the US can shore up its economy, its housing sector and its Social Security system.

Watch for investments in railroads, ports and roads between Mexico and the United States. Big bets are happening here. Among other things, this will create a powerful constituency for a Jeb Bush presidency. His wife is Mexican and he and his brother were governors in states with very high Hispanic populations.

The power and importance to the United States of secure Southern borders – Cuba to the East and Mexico to the West – is ever more important, fueling economic integration. This is one of the reasons why it was so important for a variety of interests to assert control over and to reengineer the port of New Orleans following hurricane Katrina.