(Originally started December 2015 – I just never finished it)
“They say that patriotism is the last refuge to which a scoundrel clings. Steal a little and they throw you in jail. Steal a lot and then they make you king.” – Bob Dylan – Infidels
The world is on the countdown to the next global war. Because of ISIS? No. Islam is the set up for this game, but the reasons I believe are a lot different. They are fundamental to our psyche, and as such – this war is just another act in ongoing pattern of behavior for humanity. Sorry to be so cynical. War, like everything else is fairly cyclical in nature.
To start with – and to cover the obvious basics – wars often have strange causes. Strange triggers. But they all have one thing in common – underlying unrest. This can play out in many ways, we’ll look at just one here as it is relevant to our current global situation.
Nationalism is an incredibly potent source of trouble. But it is the final stage in a long string of events that lead up to it. The next step from rampant nationalism is usually conflict.
Every society has at any given time a lot of inequities. Take for example the problem with undocumented Mexicans in the US. To the perception of most, they fill a pretty unglamorous role in taking low paying jobs that most people don’t want to do. And the US has been content with keeping the issue fairly low key – these people, whilst technically illegal, have filled some important gaps in terms of farm labour, cleaners and other manual jobs that are usually fairly low paid and would be difficult to fill by the rest of America. Until now. All of a sudden this is an election issue – and easy to exploit based on legal grounds – many of these people are illegal migrants after all. The issue is very easily exploited.
In Europe, similar types of issues exist. The recent influx of migrants from North Africa and the Middle East has created major headaches for Western Europe.
The response from what were up until now fringe corners of society is to stir up xenophobia and make all sorts of claims that “they’re taking our jobs” “they don’t fit in” etc. This exists in almost every society. And yes, some of those claims are valid. But that’s not the point. By and large, first world society has accepted a level of immigrants, legal or not, as a way to fill roles for lower wages than locals would accept. However, when internal problems escalate, these groups tend to be among the first targeted. I’ll try not to combine Europe and the US in this issue as the problems they have with migrants exist on very different terms, with very different causes. But both issues play into the hands of politicians in a very brazen way. And thats what I want to cover.
You may note I frequently mention “Perception” in many of my posts. I do make a lot of generalisations and the situations I describe usually have a particular fit to them – But at any given moment there exists a common sense understanding of a situation – possibly lacking in nuance, but this is my best effort to describe things from my own particular viewpoint. Anyway.
Nationalism has seen a rise in almost every corner of the globe. China. The Han Chinese think their place is the center of the universe – their very name “The middle kingdom” is reflective of this. In the US – a very corrosive and destructive type of nationalism is threatening to take power there, and could very well win the next election. In Europe – and this is traditionally the source of our major wars, to me an even more dangerous level of nationalism is rising. Why I say this is because if Europe fragments, and there are multiple faultlines across which this could happen – the Brexit, the fact that Mediterranean Europe still has crippling unemployment and no control over monetary policy, Italian banks have 18% of loans non performing, Deutsche Bank has been singled out by the IMF as the single biggest risk to the global economy, and then there’s the refugee crisis.
Those two are not fringe websites. And Deutsche Bank holds 55 Trillion dollars of derivatives, the same sorts of things that tore Lehman Brothers apart – only 7 times as many.
Europe is the focal point of the entire global system at the moment. It’s history – 2 World Wars, caused by nationalism. It’s not China, it’s not the USA. If Europe collapses, it will be an uncontrollable cascade of events with absolutely no idea of the outcome. The south China sea problems are totally containable for the time being – it’s like a fencing fight currently, sure, the trajectory is bad, but it is totally avoidable, by a decision to not do anything, to put off doing anything, or to do something. It may come to a head, but in the midst of all the arguing, you have two countries that need each other – China needs the US to keep buying its stuff, and the US wants China to keep selling it things. China is by far the weaker player here. The US could diversify its manufacturing out of China to lower cost markets (and is doing so) and China has no counter strategy. There is no crisis in the US. There might be if Trump is elected, there is a huge amount of disquiet, but stability wise, dont expect anything massive. Europe is where the problems are. The countries affected are not being allowed to solve them and the countries with the most to lose are not fixing them.
That is one of my major sources of information – Ambrose Evans-Pritchard, describing the situation well.
Of all the fault lines that could trigger the next global panic, I just dont think that any are quite as primed and set to go off as the ones in Europe. I have never much bought into the idea that Russia was too involved, it is mired down in its own problems, but I think that it too, sees Europe’s problems and is at the very least flexing it’s muscles a bit more. Seeing NATO generals suggesting that Sevastopol might make a nice NATO base, while such a minor comment, suggests that the level of comic genius there needs some work or that they forgot that it’s Russia they are dealing with. When Georgia tried to join NATO a few years back the response from Russia was swift and deadly. Crimea – swift, and not a shot fired. Ukraine – they have raised the cost of leaving the Russian orbit to absolutely unbearable levels for the Ukrainians. Europe is powerless to sort out the mess currently. The IMF suggested north of $80 billion to fix it, and Europe may need to bail its own out again soon (Italy). The bottom line is that Russia here can and will do what it needs to do to protect itself. If that means major war – then believe it, they will be in the fight.
China – despite the rampant nationalism there, things have a way to run before there is any trouble. Debt is skyrocketing, Capital flight and a brain drain to a small degree are problems, and while long term, I think that it’s got many of the elements of a Ponzi scheme, it’s not going to be the first domino to fall.
Japan – Zero appetite for conflict. Abenomics however is a real worry – the government and Bank of Japan have thrown every possible thing they could to get Japan moving again. The one thing I think would do it was if Abe could have persuaded corporations to pay out higher salaries – there is no greater stimulus than people spending money. Instead the cash has stopped with the corporations who are sitting on huge cash piles.
So I was wrong in one area – households are stacking up cash too. I thought it was the corporations only. But you