Protection against the “storm” Entry 9

We are now at a time when you have to connect the dots of many previous events to figure out where the world is going. I’m not crazy enough to think I have the perfect answer, but I do have an answer that I like, which I develop below.

It seems that the script for the road to the new world order is being defined.

Everything is still in its infancy, and there are great uncertainties. However, I want to tell you how I see it, in case it is useful to anyone in their decision making.

Contrary to what I usually do, I will start with the conclusions. Afterwards, I will provide explanations. I believe that this way it may be more comfortable for the understanding of what I think.

As always, I say that these are personal opinions, and that they may be wrong. What I also say is that they are based on a lot of time of study and a lot of readings, which I have been developing in previous entries. In fact, I include references to old entries of mine where you can see that I already predicted the situation (forgive me for the “self-citation”, but I think it may be useful to reread that, at least what matters most to each one). It seems that I got something right, so I will make the same effort for the future.

Conclusions.

Trump is using unconventional and undiplomatic methods to tense everything and force agreements in his interest.

Many people disagree and are concerned. However, the truth is that it is working for him: The Ukrainian war is on the way to a solution, with its logical ups and downs. Even if the methods are more than criticizable, the outcome can be good, … and we can avoid WWIII.

It seems that the one in Gaza is going down a different path: that of detracting from Iran’s strength. It is as if the agreement with Russia were of the type: “I help you to keep part of Ukraine, but you stop supporting Iran and I hurt their protégés (Hamas, Hezbollah, and the Houthis)”.

It is very important to see Trump’s deep psychological conditioning. It is in his MAGA (Make America GREAT AGAIN) slogan. GREAT does not refer exclusively to “mighty,” but, more literally, to large in area. He wants to annex territories. This avoids having to make international agreements with those territories. Of course, the territories it targets are the ones it needs for the natural resources it lacks. After that, he will be able to ensure autarky within his country.

The other countries will be able to accept their rules and be their vassal states, or not, and go to the other bloc. Trump will not care much about their decision

On the other hand, with the “AGAIN” word, he demonstrates his basis in the Monroe Doctrine, and in the McKinley presidency (both encouraged the incorporation of new territories to the USA, and he wants to do it again).

His tactic is to make countries and markets nervous with his constant announcements and changes in them. Thus, there is no way that countries and companies can take adaptive strategies. The goal is that, with those nerves, in the end, they will accept what he is proposing, which is based on his intentions to fix the trade deficit balance.

It is fomenting an economic crisis. Both in other countries and in his own. That is in his interest because:

The other countries, eager to avoid their crisis, will eventually accept the proposals.

With the US crisis, it forces the lowering of interest rates and the renewal of its debt at lower rates.

It even forces bitcoin’s price down (with its ever-changing announcements of considering it a reserve, but not in the way the community expected, and encouraging greater controls). So, he can buy the BTC he wants at lower prices, and then use it to pay off debt (when BTC goes up, and the USD loses value).

As all these crises are generated by himself with these changing announcements, when he has achieved what he is looking for, he will abandon the tactic of changing announcements, and the new normality will be established. In other words, it will be a crisis soon. It will be brief and not very deep.

I think the next step will be to focus on Greenland, the Panama Canal, the Gulf of America, and perhaps Venezuela (or just the disputed territory with Guyana). All based on securing their access to natural resources and transportation routes.

In the meantime, it aims to convince Russia to abandon its partnership with China. That is by no means easy, nor is it impossible. It is an important issue to watch.

After that, it is time to negotiate with China on the new world order (it will be around the middle of the year). It will do so when it has already controlled access to its natural resources and transportation routes. Also when it has released its military (and economic) commitments due to the wars. In other words, when it has its hands free to focus on the Pacific.

After that moment, the rest of the countries will have to choose their block of ascription. Whoever joins their bloc will be offered protection (including military protection), and will ask for vassalage. It will have an agreement with China that neither the USA nor China will harm the vassal countries of the other bloc (this will be the substitute for the old world order). And the countries that do not sign vassalage with anyone will be exposed to many risks.

In the meantime, the big risk is that one of those who are under great pressure from all these threats will end up making the wrong decision and trigger a major crisis, or worse: WWIII. I don’t think it will happen, but the risk is there.

All this refers to international politics. As for the national one, there are many conditions and risks that I will try to describe below.

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I have reached these conclusions after the study made in my previous entries (that is why I quote them a lot, and put the links so that the details discussed there can be accessed without having to repeat them here), and after the analysis of recent news.

Regarding these news, it must always be remembered that they are very biased, so they must be read with care. In the West, most of the conventional media (what I call old media) are controlled by the old powers that be (banking, investment funds, energy, …). Those powers that be are very anti-Trump, because what Trump wants is to take away their power and give it to the future (and almost current) new powers that be (the techies). Therefore, most of the news in those media tend to exaggerate the criticizable aspects of Trump’s actions, and to minimize the positive aspects.

The opposite is true for modern media (social networks, podcasts, …) which are mostly controlled by technology´s companies.

This issue of the communication channels through which the population is “educated” is closely related to demographics. This is because most older people are informed mainly by the “old” media, and younger people by the “modern” media. This leads us to find ourselves in an incipient struggle between generations on how to approach the future. This struggle is exacerbated by the current fact that wealth is mainly concentrated among the elderly.

In this situation, I find it useful to comment on the following issues in order to reach the above conclusions.

The Ukrainian War.

The Ukrainian war is in negotiations for its end. At least, for a temporary end. These are times of high tension, and there will be some step forward and some step back for a short time, but it is a fact that the war cannot continue without US support.

Europe makes grandiose statements that it stands by its support for Ukraine, but it is not united on that. Nor do they agree on the concrete way to finance that support (and without money there is no war). Moreover, even if they had the money, they don’t have the factories or the armies ready, and that doesn’t get going in ten minutes. In other words, the most Europe can do is to prepare itself to help in the future, when in a few years there is a risk that the war will be reactivated, or that other wars will start. It can also offer, once the peace agreement is signed, to monitor the tranquility on the new borders between Russia and Ukraine (although Putin does not like this at all).

It remains to be seen whether, after this process, Europe will end up more or less united. In fact, it is in the interest of both the USA and China that it comes out less united. In this way they can negotiate with each country independently which bloc it joins, and those countries will have less bargaining power than if they were united. Therefore, they will do whatever they can to torpedo the union.

Ukraine will have to cede part of its territories to Russia. Exactly what is the point under discussion, and Ukraine does not have an easy negotiation for that, even if it seems very bad for it to cede any territory. Of course, we must remember that Ukraine was not as united a country as they would have us believe. It was not so in the objectives of the different territories, nor in the ideological distribution of the population throughout the country. It is a fact that the territories of the Donbas were mainly Russophile. It is also a fact that not so long ago a Russophile president won the elections in the whole country.

In the meantime, Putin will take advantage of the favorable situation in which he finds himself to increase his demands. It will not be an easy closing of negotiations.

Regarding this, at the beginning of the war, I wrote in March 2022: “I believe that this war is the final stroke of what started with the Covid, and that it will close the stage started after WWII in 1945” (see here). It seems that I was not wrong, since today everyone is talking about a new world order, and a new Bretton Woods.

I also wrote in April 2022 (can be seen here):

In this economic prism alone, it is in Russia’s interest to get to the point where the West is badly hurt economically (it already is, with inflation and damage to the dollar), but not to get to the point where it has to ask China for a bailout.

It turns out that we seem to be at that point.

In December 2022 I wrote: What is certain is that Ukraine will have to surrender as soon as the USA withdraws support (which is about to happen), and Russia will do what China (which seeks peace) says. It can be read here. Looks like I was wrong about it happening soon, but not about the concept.

MAGA: GREAT AGAIN.

I have already said above that it seems that the objective is to annex territories to the USA. Not just any, but the ones he needs to guarantee autarky within the future (and larger in area) USA country. After that, Trump will not care much about what happens outside his country. Whoever wants (or needs) to accompany him, will be welcome, but without any negotiation, and with the imposition of the conditions established by the USA.

In this he is following the “Monroe´s Doctrine”, which was the one that led to the annexation of Texas and Oregon. I talked about it in May 2020 (it can be seen here). It also follows the theses of President McKinley, then continued by Theodore Roosevelt, who were the ones who organized the Panama Canal, the annexation of Hawaii, and the revolutions in Cuba, Puerto Rico and the Philippines.

It is indicative that he is based on those principles that he is talking with great insistence about regaining control of the Panama Canal. In reality, his message is to correct the mistakes of the Carter administration, and return to the fundamental principles of the USA. He has already taken some steps in that direction: BlackRock has bought two very important ports for the Panama Canal from a Chinese company (news here), and China is not happy and is trying to reverse the situation.

The other territories it has declared of interest for incorporation are due to its analysis of the natural resources USA needs for its desired internal self-sufficiency. These are Greenland (for its mineral resources, especially rare earths, and for its control of maritime routes); Canada (again for its natural resources); the Gulf of America (for the oil in its territorial waters); and perhaps Venezuela (also for its oil, although it may be worthwhile for it to keep only the territory in dispute with Guyana).

Without having arrived at those concrete results myself, I analyzed the issue of natural resources for their autarky in the entries written between August 2023 and March 2024. The fact is that the places Trump has selected meet the requirements I mentioned there. The summary of what I said there for raw materials can be seen here. And the one for agricultura here. Summarizing it even more, it can be said that:

Regarding raw materials, it is necessary to:
- Ensure that certain countries mentioned therein remain in the Western bloc (Australia is very important).
- Invest heavily in mining and rare earths. The mining is already being done. The rare earths thing may be one of the causes of the interest in Greenland.

With respect to agriculture, the schematic summary of the situation (with the risks involved in simplification) may be:
- The West is doing well on agricultural issues. BRICS+ is not.
- Keeping an eye on the BAU (Brazil, Argentina and Ukraine) “lineup” is essential.
- The EU, in isolation, is in a weak position.

All of the above fits very well with a document created by the International Monetary Fund, in January 2023, which I talked about here. I excerpt the following:

Describing the current state of globalization, they say (pg. 7) that the production of critical commodities has become highly concentrated, which they recognize as a fragility of value chains. They say that the USA dominates the oil and gas supply chains, and that China dominates the supply chains of minerals for clean energy. They don’t say it, but I summarize that this means that the US dominates the world that is ending, and China dominates the world that is beginning.

That’s what Trump wants to change with his criticized territorial ambitions.

Negotiations with China.

Once peace has been achieved in Ukraine, and the USA has its raw materials “organized”, it will enter the phase of negotiating the new world order with China. After that, the good times will begin (or so I hope).

Actually, this negotiation with China has been well advanced in previous talks for some time. There may have been many discreet conversations that we do not know about, but there are others that we do know about. Of these, the “Twelve-Point Plan” that China put forward on February 24, 2023 is very important. I commented on it here, and it is striking that it seems that everything stated in that Plan is being fulfilled (although little mention is made of its existence). By the way, at the beginning of that same entry, I provided a table with the result of the second UN vote on the Ukrainian war. It is good to take a look at it, because I think that the adscription of each country to one of the two blocs that will be formed will be based on this, with some occasional changes due to what I call “country transfers”.

I also spoke in the same entry about a new committee in the US Congress on the strategic competition between the USA and China (news here): The chairman of that committee, Mike Gallagher (Republican), began by saying that “China and the USA are locked in an existential struggle over what life will be like in the 21st century.” He also said that “time is not on our side.”

Regarding this, I find it curious to see that, already in October 2022, in my entry 2, in the section on “China’s position”, I talk about China’s aspirations and possible actions. The result is that it almost coincides with the 12-point proposal China made in 2023 that I discussed above.

Moreover, on this subject I wrote here, in April 2022, my theory of reverse osmosis in the new Iron Curtain. The most important of what I said is that there are going to be very different population groups on both sides of the curtain, with different social and economic conditions. This almost demands that the groups be quite homogeneous within themselves, and that the communication between blocks be the minimum necessary to promote the final homogenization of both.

In October 2023 (you can see it here), I described my way of looking at the possible negotiation with China. I think the idea was focused. It was as follows:

I imagine the offer with China saying something along the lines of, “I appease the BRICS in Ukraine, Israel, and other places. I guarantee Israel’s livelihood. I also offer agreements for the solution of energy, raw materials, and inflation in the West. But I ask for a new Bretton Woods, and that you let me keep Taiwan.”

Finally, in November 2023, Xi Jinping spoke at a dinner in San Francisco at the APEC summit, following the introduction by senior US officials (my entry here). I made the following summary:

My attempt to summarize these speeches focuses on the fact that the USA has given up being the world’s hegemonic power (this is acknowledged by the officials introducing Xi Jinping), and accepts to share with China the control of the world. And, Xi Jinping acknowledges that he is asking for no more than that. Sharing is the key word. Xi says the world is big enough to accommodate two superpowers.

The world will be different.

When all the covenants are reached, the new world order will begin, and the world will be completely different from what we know.

It can be said, to describe this world, that it will be based on two blocks of countries; that in the Chinese block autocracy will be the main system of government, and in the US block democracy will gradually lose strength to become increasingly virtual, with a tendency towards autocracy; that the great factual power will be held by technology companies, not financial companies; that the main currencies will change, there will be one in each block, dollar and euro will drop a lot in value, and Bitcoin will have a lot of adoption. In fact, regarding bitcoin, it is interesting the recent news of its formal recognition by the IMF (news here, where they decide to continuously monitor it as a “non-financial and non-produced asset”).

In July 2022 (here) I said: It’s going to be a very different world. The bad thing is that it is dizzying. The good thing is that we are going to participate in an experience of total redesign of civilization of the kind that happens very rarely. As an experience it is exciting.

Also in November 2022 (here) I said: In the end, the power is not so much in money, but in mineral resources (also agricultural). The rest we can produce by working and thinking well, that is a matter of money and manpower.

On the other hand, in June 2024 (here) in a entry that I recommend to reread in its entirety because it describes the situation very well (or so I believe), I made the following summary:

The characteristic that best defines each of the blocs is the state of their middle classes:
- In the West, their quality of life is declining. Which leads them to be very angry. That generates instability and populism.
- In BRICS+, the former lower classes are rising in quality of life, creating the new “lower-middle” classes. They are still living worse than the old middle classes in the West, but they do not compare themselves to that, but to their situation a short time ago, and see that they are better off than before. That leads them to feel happier, and to accept the dictates of their leaders because, although there is no democracy, they feel that things are working.

Precisely because of this different situation of the middle classes, the blocs of countries will be forced to function in an almost autarchic way within each bloc (not within each country). Otherwise, there would be excessive “dumping” between blocs, with the possibility of one of them “suffocating” the other.

Regarding Europe, although I don’t like it, I already said here:

Europe will lose what little power it had left, and it will have a hard time, but little by little. It will be something like the slow decline of the UK since its imperial era and throughout the 20th century.

However, perhaps a bit influenced by my tastes, I see a more beautiful future for Spain, which I described at the end of this entry. The idea is that Spain, besides being the “museum bar” that is going to be all Europe, has the geostrategic advantage of the Strait of Gibraltar, which represents an important point for the transport of goods between Europe and Africa, as well as the possibility of controlling those that go from the Mediterranean to America. In addition, in Spain we have the cultural advantage of the Spanish language, which represents the connection with South America. By managing these aspects well, great things can be done.

Speaking of the future of Europe, it is interesting to read a recent article by Paul Mason (an important intellectual of the English left). It can be seen here. In it, he tries to describe the UK’s possible options for the future. He concludes that it must coordinate with the EU to be important in the world. He has an interesting sentence: he says that Europe must “stop being herbivorous and become carnivorous”. In any case, my opinion is that his proposal is a very difficult dream to achieve.

Another issue that will define the new order is currencies. In fact, they are all losing value due to inflation. I highlight here something I already said in June 2022, in this entry. There I provided the following graph, with this comment (among others):

The result is impressive. The yellow line (the price of oil in gold) is absolutely flat for the last 70 years. However, the price of oil in conventional currencies goes up (sometimes also down).

That is to say, currencies are an artifice that works badly, but prices have almost no inflation in barter. This is something I want to go into in more detail in the following entries.

U.S. internal risks.

Everything I have outlined above relates to international policy. On the domestic side, Trump faces serious difficulties. We will have to keep an eye on his evolution. I do not have space here to analyze them (neither was the objective), but it is good to state them in order to be aware of their importance:

The economic equilibrium will suffer. There is talk of accepting pain in the short term for profit in the long term. We will see if it will be fulfilled.
The time factor affects him a lot. He may lose congressional power in the next elections, and that means slowing down the process. Today he puts speed into everything because he controls the 4 powers: legislative, judicial, executive and networks.
Inflation with recession is a very complex environment. We will see how he handles it.
Decisions abroad have many implications at the local level: impoverished farmers, manufacturing manufacturers with supply disruptions…etc.
If technology´s companies receive extra taxes in other countries, their invention falls apart.

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As always, I welcome comments on my email: pgonzalez@ie3.org