Archive for March 2015

There is a new puzzle to play now

March 21, 2015

WP_20140404_001The world we live in has now a new situation to handle that I call a new puzzle to play. It is very much a complicated one, and I don’t like complicated issues, because they normally don’t work well. The very old game is back – power game. But not enough with that – now it is back even stronger through military power. So, we have now a game with economic power + military power + mental power + moral power + nature power. There are a couple of new elements or reborn elements here: the world has become multipolar with several centers of power – depending on definition – like Asia – Europe – USA or China – EU – USA or Developing countries – BRICS – OPEC – Developed Nations or nuclear and non-nuclear power countries and military pacts or lately more troublesome radicalization of groups of people – destructive power in a way.

There are simply more unstable and risky locations on this planet than a couple of years back through natural disasters, epidemic diseases, terrorism, military action and wars, corruption, unemployment, national debt, political instability etc.

The basic elements for a better future are centered around equality between people, freedom, and prosperity. We are talking here about happiness that can be seen in the “American dream” or even the highlights of the French revolution in 1789. The basic idea behind the EU is to avoid war between Germany and France – this has worked well. It is obvious for even a child without no education that you cannot succeed if you are in a fight all the time. So, the peace must be there as a foundation. If people do not have equal rights and a chance to improve their situation, lots of energy remains unused or is getting lost. Apparently until kinder garden age a human should understand to live in peace and have friends to play with. It is then obvious that by working together more can be achieved. Suddenly we figure out that Adam Smith was right – it makes sense to deal with others and improve ones situation (he wrote it also around 1789). Then you graduate from the high school with the great idea to change the world and make it better! After that moment people tend to forget everything and things get complicated!

This is nothing new yet, but I just wanted to remind you about the simple game we need to play and not the complicated one. There are now players who want to change the rules of the game by limiting the people’s rights, destroying peace and not letting them to pursuit after happiness and prosperity. The EU‘s foundation is in avoiding a war between Germany and France and that works well. With over 500 million inhabitants the EU is having the largest economic power now. However, the EU got surprised by Russia in respect to military power in Crimea and a war in Ukraine – the EU has no defense forces by itself. Now it is obvious that in future years a massive build up of a new military power will happen. That will be one driver of the European economy in the future. Furthermore I will expect that in a very near future European politicians will start to talk about birth rates and limiting immigration. When the birthrate will get up then the immigration will get reduced step by step. How to turn Europe to grow again is the main question. When the EU – USA free trade negotiations lead to a positive outcome there wlll be a new huge economic zone in labor. The USA has extra strength from the fracking oil and gas and thereby it has gained the independence of foreign energy. The economic zone with EU and USA and Canada & Mexico will be around 900 million people. That can be called a power! Also Canada and Mexico have free trade agreements with the USA and EU and both have oil, too. When the EU builds up its military muscle as well, the new puzzle has more parts to be played. China has reached economic power and it is now working on its military build up, too. The Chinese economy has been growing due to massive pumping of public money into infrastructure. Now the economy is running if the consumption remains high and grows. There are too many empty buildings in China and stock values might be too high, so some reduction in property values and stock might be expected in the future. The low cost oil has helped China a lot in its situation this year. Europeans profit of the ow cost oil as well. Australia has been doing well for a couple of decades now based on mining industry and Asian growth. The situation should stay like that, unless nature events disrupt the positive trend there. That risk is also with other countries, too, like Japan, Vietnam, Philippines, New Zealand, the USA, Chile, Turkey, Italy just to mention a few. India has a huge potential for the future. This will certainly drive European and US politicians and businesses to improve ties with India. The democracy in India is a positive thing, but the values are at least partially still far of the western ones – especially what comes to the quality of people. The regulation is also something that needs of improvement there. When India invests in India (unlike Russia not investing in Russia) and continue to do so the results will be remarkable – even today the national income per capita in India is higher than in Russia – what a change! My expectation is however that India will have more closer ties with Middle East countries in the future based on the energy issues related to oil and gas. India’s distance to ME is less than to Europe or the USA. The new component in the economic part of the puzzle is the rising countries in Africa. There is now oil and gas and a low cost level available. Some companies are moving out of China to Africa already. Many educated people from Europe are moving to work in Africa now and help them to build their new wealth. There is lots of hope in Botswana, Namibia, South-Africa, Mozambique, Tansania, Kenia and others on top of Nigeria and Ghana and North-African countries who had oil already. I shortly only mention now that there are developments also in the South American countries and an intensifying situation around the polar energy discussion related to Canada, USA, Greenland (think about Denmark as an oil country, too), Norway, and Russia.

This was my short introduction to the new puzzle with multipolar situation. In the future I will dive deeper into this and give more projections and forecasts about the future. It is interesting to see that many things have been moving toward that direction I have predicted. Especially my hope of closer economic ties between EU and the USA seem to proceed well. My biggest mistake so far is that the USA has not made the decision yet to print so much of Greenback (dollars) that it could pay off the foreign debt. That day might however come later on – the timing is very difficult to predict. My assumption didn’t take the fracking oil into equation and that changed the situation. However, the outcome is anyhow what I predicted – the US economy is growing again.