How Great Unwinding deal with countries:
CATEGORY 1
CORE EUROPE. EURO+ countries and Japan.
You will live through an era of gracious decline, Japan, Germany, Sweden, Holland, France, Denmark, Norway.
living off capital royalties and tiny little industrial segment very specialized sectors.
CATEGORY 2
US and UK
A heavy burden of past commitments will make the shrinking faster than otherwise would be.
Carrying over huge military costs that are fast drawing the countries coffers.
Entitlements that cannot be cut due to political system add to military might inflated costs
Military might kept for fear of defenseless when collapse ensue.
Aggregate demand falling. Unemployment raising.
Debt load will sink both countries.
CATEGORY 3
Sharp fall with a thud. Spain, Italy, Belgium, Eastern Europe absorbed the cost structures of a welfare state from West Europeans (Poland, Slovakia, Hungary, Baltic states)
Joining the basket cases. Iceland, Ireland, Greece, Portugal.
Those countries were on the way to Portugal, Ireland Greece stage when 2007 crisis hit.
Core Europe gave them a spurious feeling that accepting them into the EU was a passport for a wealthy country.
Although they had no natural, resources, oil and gas, agriculture or even cheaper manpower after gone in Euro Zone.
For two reasons they could not reform and kept spending:
Their government could not admit they were going back to where they come from. That would be political suicide.
Those big construction companies needed a constant stream of new projects to keep making money.
CATEGORY 4
Gravitate around bigger economies: Austria, Czech Republic, (around Germany) Finland (around Russia), South East Asia plus Taiwan (around China).
The bunch that never made: Romania, Bulgaria, Moldova Ex-Yugoslavian states and Turkey. Those countries could not even reached Portugal, Ireland Greece stage.
The bunch that the world forgot: The Caucasus strip. Iran, Armenia, Azerbaidjan, the stans. Those countries are living their first half of last century.
They serve as maneuvering grounds for the old powers that still try to take advantage of them but will move to gravitate around India and China.
CATEGORY 5
The Gulf oil exporting countries, North Africa. Contrary to the conventional wisdom that middle classes will raise and demand democracy, it was the poorer populations who started raising demanding jobs and food.
In one hand oil keeps the oligarchs well fed. In the other hand there is a limit of how much population can live from that oil.
Starting in the 70s, it was easy to satisfy them. Government told them to keep the Koran and the it will raise them from their tents in the desert, give them cheap food, and pick truck and cheap gasoline
In North Africa, they lived off the increased wealth of Gulf Countries, Lebanese and Egyptians are more educated and could benefit from the jobs offered in Gulf states.
Gulf countries, their sons, are not bedouins coming from a tent. They were raised in cities, with air conditioning and want to have what Dubai has.
They reached the ages they want to raise families but they cannot afford the married life.
They revolt.
CATEGORY 6
The coat tail riders: Australia, Canada and New Zealand
Big source of raw materials will let US coat tail loose and grab developing countries coat tails. Their disadvantage will be that they cannot get into Africa to add to their indigenous resources, as Brazil, India and China can do.
CATEGORY 7
The Negro: Africa will suck every USD bill to burn stages of development form Bronze Age to 21st Century. Its currency is the raw materials buried inside their ground. Emerging countries will ally with the local elites to develop those resources.
Differently from colonial masters, they do not want political power or to rule the negroes just do business with them.,
The importance of Africa is the market for everything that can be produced.
Africa will become the test ground for all kinds of business models and technology in the coming years.
CATEGORY 8
The Latin Americans: These countries are people are in for a surprise. Everything they believed is being proved not true.
It is the colonized mindset at work. They bought into the idea that after independence they needed to become like their colonial masters. Not that they could forget everything and write their won cookbook. (see MQ’s idea that his former colonial masters had some values and that those set of values were the reason they ruled the world.)
They believed that Europeans and Americans were somehow holders of some advantage. They wanted to understand what that advantage was and replicate them in situ.
They mistakenly thought that an army of PhDs were a condition for development.
They thought that one needed to put a democracy in place for their countries to develop.
A country does not need a educate caste to develop, neither democracy is a condition sine qua non for development.
Expect them to throw overboard their colonized mind-set. |
