Outlook on world instability
Are we on the brinks of World War III? With the US losing its ground power is being shifted from the West to the emerging economies of the East. China looks set to become the new superpower. Unfortunately, as proven by history, a major shift like this has never occurred without war.
1) A weakening USA
The USA dictates much of what’s happening in the West. Here are the main drivers behind its decline:
- a weakened dollar due printing money to fund the war in the Middle East
- excess liquidity has led to the reckless over-investments made by Western Banks and Money Managers which then led the credit bubble. Triggered by the sub-prime mortgage crisis, the bubble has burst, creating a huge hole in their balance sheets which they cant even measure
- this will further weaken the dollar as the US will be unable to raise interest rates for fear of plunging the economy in recession. 2008 will be the year when the dollar loses its clout as the global currency. Central Banks are already shifting their reserves to other currencies.
- If China and Saudi Arabia break their pegs to the dollar – which they will be compelled to do as the dollar is weakening and bringing their currency down with it, there will be a revaluation of their currencies and a rise of real interest rates which will retract the huge outflow of cash we’ve been seeing from those economies into the western world. This will weaken Western currencies and equities further.
2) The inevitability of War
Like any empire that’s going down the Americans will be compelled to flex muscle whilst they still can. When problems at home are growing, the obvious thing to do is to try to capture foreign territory that’s rich in resources. Added to this is the influence of the Jewish lobby which will push the US to take action against Iran to protect Israel in the Middle East. Action against Iran is almost inevitable.
3) The Emergence of the East
If the above happens, there is a good chance that the other growing powers will be compelled to join the war. The US has enjoyed too long a period of meddling in unwanted territory without being challenged by anyone. This time a number of drivers will escalate the war
- Growing nationalism as the balance of power is shifting. We have escalating tension between Russia and the West. Nationalist tension has been a key driver to all great wars.
- China is expanding rapidly and desperately needs resources. Unlike Russia they do not have their own energy, so the oil-rich Middle East will be lucrative ground for them also
- Extremism: the continued ignorance of the Americans is fuelling extremism. Isn’t “extremism” relative? To the Islamist fundamentalists the US is extreme and unjust in its interventionist approach. Like Hitler did with the Jews the Americans are pegging the world’s problems on Islamists.
- A weakening US economy will mean they will find it very difficult to fund another war. Printing money will drop the dollar further and further destabilize their economy
Alas, here we have it: the ingredients of World War III. Our present climate is frighteningly reminiscent of pre-World War II times, when growing nationalist tensions, intensifying ethnic conflict and a shifting balance of power escalated to a major war. No superpower has ever seceded power quietly and the US doesn’t look likely to be the first. If this happens, history will be, once again, repeating itself with a major conflict bringing down the incumbent super-power and emerging the new world leader – China.
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