Editor’s note (Piquet): Here is the complete article on this topic, the first half of which was published last week (I was delayed in editing this complete version—my fault). For those readers who want to read only the second part, skip to “Hegemon of the Balkans.”
Introduction
Recently, one reader wrote something remarkable in the comment section of one of my articles. He mocked my constant claims that the European economy is finished. When at the same time European stock markets rise and rise.
I need to admit he is right.
It was a mistake to make that claim without explaining the current situation. That’s why I decided to write this article.
I’d first throw in to understand the situation entirely that we need to distinguish between short-term and long-term considerations. I’m going to explain my thoughts about this.
Nevertheless, I’m going to use this opportunity to share several other thoughts with you as well.
Resources
I wrote a lot about what I’m going to expand upon now. To understand better where I’m coming from, I strongly suggest you read the following articles first:
European Economics
Terminology
First, what is Europe?
Is it the European Union? Is it the European Continent?
I’m going to address both separately.
Nevertheless, Europe is the European Continent and not the wannabe dictatorship called the “Union of European Socialistic Republics” (UESR), which also contains elements of fascism. Oh, pardon… I meant “European Union,” I just mixed up the words.
The European Continent consists of all these (previously independent) beautiful single nation-states. And I love my (independent and free) Europe! Except that it is currently NOT independent and free.
Value of the EU
Now, I’m going to write a few things that some, especially my German readers, might disagree with at first glance. I think things will get clearer later when we delve deeper into the matter.
Initially, the EU was a good idea since it brought a lot of advantages:
Free movement (Schengen) and right of residence
No tariffs among the Union States
Was it really a good idea?
As I said, most likely, initially, it was a good idea. It was a Union among comparable industries and nations. So, essentially, these points were advantageous for everyone. And I think it went on to be beneficial, to some degree, even though not to the same degree for all, until the collapse of socialism in Eastern Europe.
After all the small Slavic countries opened their markets and started privatization in accordance with their Western “advisors,” things changed. The EU increasingly became a political block and evolved year by year to something resembling the central planning committee of some former socialist nations. Even though we are NOT there yet. It concentrates ever more political power and now seeks to even concentrate military competencies in Brussels.
That is the opposite of “free and independent” if we consider all our beautiful single nation-states such as France, Italy, Spain, etc.
Now, let’s revisit the abovementioned two advantages of the EU after the EU enlargement in East Europe and the introduction of a joint currency, the Euro.
No tariffs
This turned out to be a blessing for producing (domestically or abroad, it doesn’t matter) and exporting nations. Mainly Germany.
It turned out to be a disaster for most, but not all, former socialist countries. They had a well-established supply and sales chain within the former socialist block. When socialism broke down in Europe, most of these formerly good working enterprises and supply chains collapsed and quickly became uncompetitive on international markets. Especially in the EU market, since there were no tariffs.
Most of these countries transformed from producing and consuming countries into importing and consuming countries, which is a disaster.
Most former workers became unemployed and, over time, found only lower paying service jobs, such as waiters or shop assistants.
Don’t get me wrong. I didn’t say that it is a pity that they abandoned socialism. Or that socialism was better. It’s up to the individuals to decide what is/was better in their own situation. The affected people should decide, not outside observers.
I want to say that how it played out was a disaster. They should have managed the transition to the free-market economy themselves instead of opening the doors and letting tens of thousands of Western “advisors” tell them how to convert to a market economy “within days.”
They should have done it themselves over time and under their own conditions. Opening slowly with one step at a time and then adapting.
What happened instead was an epic rape of us Slavs.
And an economic boost for the big economies of the EU, mainly Germany, for the next two decades. The essence of these countries (not all) was literally eaten up.
I also think this trend will be reversed slowly and things will improve. But for a certain period, this forceful conversion of East Europe into a market economy was essentially a time when West and Central Europe looted the essence of East Europe. Again, things are getting better and will become good, not because of the EU, but because of “other” factors.
Free Movement and right of residence
Free Movement is almost always a very good idea. Maybe not during war or when an enemy state tries to infiltrate you, but I think it is good in all other cases. It is enriching for people and countries if people can travel and learn about other cultures, try to understand them, and work with them. There are not many instances where one could label that as bad.
It is entirely different from the right of residence in the EU. Between equals, it doesn’t matter. A few people will always move from country X to country Y and vice versa. But the right of residence between a large, powerful nation and a rather poor country with high unemployment problems (due to the collapse of the socialistic economic system) is an entirely different story.
For the big nation, it is a blessing. They get an adult, educated, skilled, and cheap labor force for their industries. They don’t need to invest hundreds of thousands of Euros to raise and educate them.
On the other hand, the small and poor countries invested all this money and raised and educated these people. And then they are “sucked out” of the country by a powerful and wealthy country. And this is especially easy with the right of residence.
An argument would be, without a doubt, that these countries are simply not competitive enough. If they were, the people wouldn’t be incentivized to move away. Right. And here we come to the “Economy of Scale,” which I described in detail in Economics and Empires 6. It concludes that it is impossible for a little country with a small population and limited natural resources to compete with a wealthier country.
When the socialist block was in place, these problems did not exist since the economy of scale also applied there. It was a very large, common, and coordinated market. And then all of this was gone, and all single countries became instantly uncompetitive.
Does that mean that small countries that are naturally unable to compete with big, powerful countries should lose their statehood and simply join a bigger country? Does it mean that these countries don’t need their people since they are uncompetitive, and therefore, they can “donate” their able-bodied people to a bigger country that needs cheap labor?
I don’t think so.
I think that these countries should protect themselves and act accordingly based on their national interests. And thereby opening at a pace that allows it to adapt to new realities. And close its market, if necessary.
We in Republika Srpska, Serbia, and Montenegro are not in the EU. But we are being slowly but steadily depopulated by this process discussed above.
This is the difference between short-term considerations and long-term considerations.
Considering the short-term period, some politicians might see the advantages of large numbers of people who are unemployed, and so leaving the country. Having fewer problems with them.
In the long-term consideration, this is a demographic and social catastrophe that eventually, over decades or centuries, will ensure that these countries will simply vanish.
Have problems with unemployment? Why import all the stuff that is needed from abroad? If you have a high unemployment rate, it is CRIMINAL to import commodities that you could also produce yourself with the available workforce and reasonable investments.
How about putting the support of startups as the maximum priority? Supporting entrepreneurship? Developing plans for what commodities need to be produced domestically and providing tax breaks and subsidies for startups and other domestic companies that produce or innovate in this sector.
Of course, Western “advisors” advise how to open markets, privatize everything, and sell out the country. However, none of these “advisors” advised how to promote entrepreneurship and the startup spirit in the country. In the universities. In the schools. Etc.
In the Balkans, most teenagers attend school and study. And end up as waiters or shop assistants after graduation. Congratulations. Or leave to go abroad.
But no, our Hegemon (???) doesn’t want us to be domestically successful. He wants us to buy his commodities and to take our people. The best current example is Ukraine. It is to be expected that millions of young and educated Ukrainians (Russians indeed) will be “stolen” forever.
Euro
The Euro was a bad idea from the beginning.
If you want to be successful in international markets, you need the ability to adapt your currency to domestic and foreign demand fluctuations. Especially if you are highly dependent on foreign trade, be it imports, exports, or both.
If you have a Union of countries, then this is impossible. Each country has individual demands and requirements. Some countries need a stronger Euro to be prosperous. Some need it to be weaker. In theory the value of the Euro will not match the requirements of ANY country.
In theory.
In reality, it absolutely matches the requirements of one country — Germany.
Germany is a major exporter. And it benefits greatly, within its current business model, from the European Union. And in turn, many other EU countries are benefiting from a strong German economy.
So, it is beneficial for the EU to align the value of its currency with the requirements of Germany. If Germany prospers with its export-based model, then most other “industrial” EU nations also prosper.
Considering the needs and requirements of every EU state, one would conclude that to some of these states, the Euro is poison. They could prosper far better without sacrificing themselves for the “common good” of the EU if they had national currencies. They could place their products better on international markets, making it more difficult for domestic businesses to import commodities. And thereby creating domestic demand and promoting entrepreneurship and startups in the best-case scenario.
I wrote a very long introduction to finally come to one of my first (of many) conclusions.
Germany is led by a certain hierarchy. And within this hierarchy, democracy plays a very small role, like in the rest of the West.
Here is the pyramid of power in Germany. Note: Most power is on the top.
So, to appease and subjugate the German Oligarchs (some very wealthy industrial families) and thereby secure control over Germany, Germany was allowed to become the hegemon of the EU. In other words, the EU has been built around Germany for a very long time to match its needs.
After the collapse of the socialist block, Germany was allowed to become a hegemon within the EU and a colonial/imperial master of the Balkans (more about that later).
This was established to be able to quickly assimilate the East European Countries into the Western economies (devouring them). And later to keep all EU countries under one point of influence. This ended recently. The EU concentrated so much power that Germany no longer is needed to fulfill this role.
Moreover, to be able to compete with China the US is forced to reindustrialize and develop markets for its goods. Germany has traditionally been a big supplier to worldwide markets for industrial goods. Hence, the USA needs to destroy German industry to eliminate one of its biggest competitors for industrial goods.
Downfall of Europe’s Economy
Why am I writing so much about Germany? It was chosen as the hegemon of the EU. So, what happens with Germany has a direct and major impact on the other European countries.
So, the claim is that Germany or Europe in general are still doing well and seeing high stock market values.
Check out the next figure:
Germany is deindustrializing already! Judging by these official figures, they are deindustrializing quickly.
The same with the stock of orders in the German industry:
The direction is clear.
In Germany, small and medium-sized enterprises were the backbone of the industry. And they can’t bear the burden of increased energy prices and all of the regulations around the transition to green energy. They are either dying or trying to relocate to the USA or elsewhere.
The big industrial companies, which are listed in the DAX (Germany Stock Index), are in a better position to cope with the difficulties, even though they are also struggling tremendously. Nevertheless, they are, to some degree, benefiting from the death or relocation of smaller or middle-sized competitors. Which is called centralization.
Moreover, most of the large enterprises are also producing abroad, but the accounting is based in Germany. So, they can still produce at competitive places (not Germany) and write positive figures in Germany.
I think the bottom line is the following: I will explain later what the death blow will look like, but most industrialists are aware of what is to come. So, hyping the stock indices to unrealistic heights will help them by withdrawing assets before the crash and reinvesting them in commodities such as real estate or gold. I’m sure these oligarchs, who mainly hold the shares of German industries, will have inside information before the crash and act accordingly. I have no evidence for it, but that’s the usual scheme.
Now, the question is, when will it be evident to everyone that things are catastrophic?
There are three events in the making to finish Germany off and, thereby, the current European order:
When Russia finishes off Ukraine, which should be by the end of this year (if there is no major external escalation), Russia will have a land bridge to Hungary and Serbia. This will give these countries the opportunity to choose markets and suppliers freely by the mechanisms of a free-market economy and not by blackmail and pressure (EU).
Since the neighboring EU countries will get step-by-step access to this new economic lifeline, it is expected that more European countries will choose to trade with BRICS instead of being forced to trade with countries where they pay twice the price. Moreover, they will be able to sell their products in other currencies and become competitive again.
Germany depends heavily on trade with China, both for imports and exports. Check out Economics and Empires 2 for detailed figures. If Germany loses access to China, then this would be a death blow to the German economy. It is very hard to imagine how Germany could survive this with its current business model.
But hey, why should Germany lose access to China? 😊 It is not suicidal? 😊
Correct. Germany will lose access to China exactly as it lost access to cheap Russian gas. The Americans blew up the Nord Stream pipeline, so they will blow up German relations and trade with China. Most likely through some crazy EU regulations that are already in the making (see the US tariffs on Chinese EV cars). And through internal saboteurs like the German Green Party.
Finally, Germany also has a big market in the USA. The US doesn’t want to have Germany in its market anymore since they want to reindustrialize. The US accepts German companies in its markets only if the German companies move their production to the US. Apart from that, they do everything to make German business uncompetitive, such as blowing up pipelines and forcing entirely unrealistic green transformation projects on Germany through their “The Green Party” saboteurs.
So, Germans are not only going to lose the American market. They are also going to be transformed from a producer and exporter of goods to a consumer and importer of goods. Especially from China in the short term and the US in the long term (if these plans succeed, which remains to be seen).
And with a failing (maybe even a disintegration) Germany, the European political and military landscape will change dramatically.
And this is the difference between short-term thinking and strategic planning/thinking. Currently, things might be covered up to look “okay,” but the big blows have not arrived yet. They will unravel within the next three years.
Hegemon of the Balkans
I already mentioned above that Germany has become the hegemon in the Balkans. It is one of the incentives that have been granted to Germany in return for the compliance of their elites to the higher hierarchies of the Western Oligarchy.
As most of the big EU countries are allowed to maintain some degree of former imperialism, always under the overwatch of the Americans (Western Oligarchs indeed), Germany received the right to maintain the Slavic part of the Western empire. Strangely, if you read German literature from the time BEFORE the Second World War, you always see the obsession of high-ranking Germans to rule over Slavs… I have no idea where this obsession came from, but it is currently satisfied…
To my German readers, I’m fully aware that the average German has NO IDEA or intent regarding all of this. I’m not accusing the German people of anything. It is your oligarchs who are racist to the core. Especially concerning this obsession for/against Slavs.
The French got the right to further maintain their African colonies (although this is being rolled back by “external powers”). The Italians also have some responsibilities in Africa. The Brits have their Commonwealth.
And to be sure, the Americans are also present with boots on the ground in most of these sub-empires. Trust, but verify, as Americans say.
These are only a few examples of still-maintained imperialism structures in hierarchies.
Germany is trying to:
Rule over Slavic countries politically, especially in the Balkans. A perfect example is the “High Representative for Bosnia and Herzegovina.” Currently, it is a German who is trying to break up the “Dayton Agreement” and, thereby, the Serbian entity within Bosnia called “Republika Srpska” (my home, BTW). The target is clear: Breaking the Serbian resistance to Bosnia becoming an EU and NATO country and thereby losing the rest of its little sovereignty and dignity. Nevertheless, there are far more examples.
Build roads in the Balkans, not out of charity, but to connect the Balkan regions to German distribution networks of German products. Thereby bankrupting the domestic producers. If you go to Zagreb (several years now after its accession to the EU), you will see mostly German companies and stores there. The domestic businesses were slowly but steadily driven out.
Is this a bad thing? It has its pros and cons. It is somewhat good in that it creates some jobs and educates the labor force. Still, most of the money flows out because the HQs are in Germany. Taxes are avoided as well due to “investment agreements.” And finally, there are a lot of strings attached to these investments. Like: “We invest IF you XYZ.”
Taking the educated youth and young families to Germany. Germany has a demographic problem, so it is entirely dependent on importing millions of people per year to keep industry and the social system working for several more years until the final collapse.
There are more intentions, but I think I mentioned the most important ones.
I think all of this is going to change now. As I mentioned already, Germany is no longer needed for the empire. It built up all the necessary structures within Europe to make it easily controllable for the Western Oligarchy. All these competencies are concentrated in the anti-democratic structure called the EU. You do not need to pretend about democracy anymore. The EU is ruled entirely by unelected officials.
Moreover, as mentioned above, the German industry is no longer needed. The opposite is the case. It has become an obstacle to the Rest of the West. So, it is being demoted step by step, which is called deindustrialization. This process started in 2022 and will only accelerate.
The funny thing about this is that the German oligarchs and elites have been used exactly like other elites worldwide before they were thrown away like a used condom. Like the Ukrainians, the Afghans, etc.
Saying that the German elites are now upset would be an understatement. The representatives of huge German companies like BASF (the representatives are not the Oligarchs themselves) are already publicly criticizing where all of this is leading. This is very unusual for Germans. The Oligarchs themselves are nowadays very often in the “Kanzleramt” and are demanding to maintain relations with China as the last straw before a full economic collapse. I mean, literally, the Oligarchs themselves are showing up there.
And I think that Scholz would like to comply. Or, in other words, he IS complying. But there are higher powers that will break everything down. As I already mentioned, the blowing up of the Nord Stream pipeline is an example. And other internal sabotage acts…
My personal advice to Germany: You should abandon both your wannabe imperialist ambitions in East Europe ASAP, and you should refocus your business model from an export-oriented economy to a domestic market-oriented economy in order to save yourself from the full collapse, which is about to come. Finally, you should scrap your centrally planned green transition and flush it down the toilet. It is specially designed to destroy your industry so that others can take over your markets and YOU AS A MARKET. It was facilitated by The Greens, which is an anti-German party.
If you want to be green, okay. Nothing bad about that. But state the goals and put a price tag on emissions, which are growing at a reasonable pace, and let the free-market economy find the best technical solutions to these problems. Stop what you are doing with your central planning committee, which determines everything from technology to process and so on.
Even if you do all this, you still will have the problem that you now depend on triple-priced energy imports. And if you don’t comply with external guidelines, the price could easily rise to 400% or 1,000%... Congratulations.
Serbia, Hungary, and China
I have written several times already about the strategic outlook for Serbia’s survival in the Balkans as an “independent” nation. The prospect of survival is connected to the fall of Ukraine. When Russia gains access to Hungary, Serbia will be saved. Hungary and many other East European countries, whose only purpose in NATO and EU is to serve as a battering ram against Russia, will also be able to break free and prosper.
But why did I write “independent” in quotation marks? Formally (de jure), we ARE independent. Factually (de facto), we are not. We are cut off from the sea. NATO collaborated with the “President” of Montenegro (also my home), Milo Dukanovic, and managed to cede from Serbia during a time when Serbia was still weakened and led by morons after the NATO aggression against our country.
We are surrounded by NATO countries which are themselves also surrounded by NATO countries of a higher imperial importance. Yes, there are lower-class NATO/EU countries. They serve solely to expand the empire’s influence and political goals. Then there are the higher-ranking imperial states such as Germany, France, and Italy.
Due to the fact that NATO surrounds us, we are de facto dependent. If we want to have energy, medicine, machines, etc., we need to comply with the rules imposed on us. It is literally a classic siege.
Then there is Kosovo. Kosovo also was de facto but not de jure taken away from us by force by NATO. The Serbian population was mostly driven out, and the former parts, populated by Serbs, were repopulated by Albanians. They are now ruled by former criminals, mafia members, and terrorists. They are driving the Serbs step by step out of Kosovo and are protected by NATO (KFOR).
Our government is complying with the events because they are forced to. There is currently no other choice but to withdraw step by step but, in the process, resist heavily to buy as much time as possible. If we do not comply entirely, we will either be heavily sanctioned, or there will be war again.
You can think of our President Vucic from a domestic point of view what you want, but I think that he is doing the right thing with regard to Kosovo, and I think that it is coordinated and synced with Russia and China.
We managed to build our country up from the ashes of the NATO bombing in 1999. We are not world-class, but we are not bad. The last thing we need now is to be sanctioned or bombed into oblivion again. We learned before that Serbia’s biggest problem is demography. We need people more than anything else. Especially children and young people. But a lot of these got sucked out of our country by some wealthy EU countries, with Germany at the top, in the previous twenty years. And we lost a lot of people in the wars of the 90s.
Making the situation worse would cause exactly the opposite. Our scarce youth would be decimated again, and hundreds of thousands, if not millions, would flee abroad. And we are only a few million…
Vucic is doing the right thing: Buying time until the EU and NATO start to disintegrate. And this process will start with Russia’s access to Hungary. Hence, Vucic needs to buy time until the Russian army reaches the Hungarian borders.
And this is exactly the reason why Chinese President Xi Jinping recently visited Serbia, exactly on the day when NATO “accidentally” bombed the Chinese embassy in Belgrade in 1999 during its aggression against the Serbian people.
It was about reassuring Serbia that as soon as Serbia is reconnected to the free world (as opposed to the unelected EU dictatorship), it will become a major trade hub and basically the gateway for Eastern BRICS trade into the “re-opened” European continent, especially by the Belt and Road Initiative.
Hungary is probably even more important and will probably benefit even more since it is the direct connector to free Europe via the Russian “Ukraine” oblast.
By the way, here is a little self-promotion. I was the only one more than a year and a half ago who revealed this strategy. No one considered it possible. (Connecting Europe to BRICS by Hungary). And now Xi Jinping himself confirmed it with his visit to Hungary and Serbia.
However, as soon as Serbia is reconnected with Russia, it can throw all EU, especially German, influence out of the country and refocus solely on national interests. It will also be supplied with modern missile technology and components and build up deterrence against all kinds of aggression. We do not want war at any time. Remember my words about demography? But we certainly can make the costs of aggression against us too high for the West to consider for the sake of holding on to Kosovo.
As soon as we can be supplied with everything we need via land, like medicine, machines, and technology, we can scrap the EU blackmail and follow our own interests.
This does not mean taking Kosovo by force. As I have pointed out in previous articles, we will get Kosovo back when NATO, the EU, and perhaps America itself start to disintegrate. And this will be at the latest by 2030 and it will gain momentum after the Russian victory in Ukraine. The empire will have other problems than Kosovo. Then, we will simply move in and restore order without Western resistance.
What we certainly can do, after getting access to the land bridge to Russia, is to stop our gradual withdrawal from Kosovo. And stop accepting all the crap that the Kosovo “authorities” (in fact, the EU handlers) are imposing on us Serbs in Kosovo.
Western Trade with China
And since I have probably already annoyed people with this article (I hope my German readers are not annoyed since I do not accuse the German people, just their Oligarchs), I’m going to continue the same with the Chinese. Sorry 😊
Recently, we heard a lot of rhetoric by American politicians like Yannet Yellen and Antony Blinken about Chinese “overcapacity.” China has become the industrial “factory” of the world. It is producing industrial goods for a good portion of the world, especially for Western countries. China’s industrial capacity is not just “bigger” than America’s; it is at least twice as big, possibly bigger. And GDP is definitely the wrong metric to measure industrial capacity.
Let’s look at Germany again. In 2023, Germany imported goods worth 157bn € from China. Germany exported to China goods worth 97bn €. These are incredible numbers. Now, let’s look at the US. In 2023, the US imported goods worth $427bn and exported goods worth $147bn. These are even more incredible numbers.
We could go down the list of all Western countries’ trade with China, and we would see similar statistics. And not only the Western countries. The same goes for most other countries as well.
So, the bottom line is that China produces most physical goods the West uses.
According to the logic of national interests, independence, and sovereignty (outlined in my Economics and Empires articles), this is a disastrous situation.
What follows can be perceived as “China-bashing,” but it is not. It is, rather, showing how idiotic the West acted in the previous decades. You will understand the difference when you finish reading this article.
President Trump has popularized the term “America First,” and I fully agree with this policy. From my point of view, the sole purpose of any government should be to ensure its people's prosperity, independence, and freedom. Hence, it should be led solely by national interests.
Therefore, I am in favor of all the “First” policies. Russia first, America first, Serbia first, France first, etc.
Being dependent on machinery, spare parts, medicine, and critical technology in remote countries is criminal negligence. Your people’s lives and their well-being depend on these things, and you put them at the mercy of a foreign power? You are a criminal! Of course, there are nuances. Not every country is able to handle everything on its own. We had that topic already. But first, it should do everything it can with its own people and labor force before it sources anything in foreign markets. If it is forced to source from foreign markets, then it should be under strategic consideration and with countries that are considered to be friendly for the long term.
So, you should only import goods if:
Your people are fully employed, and you have no spare capacity.
You cannot produce the goods yourself because of the lack of technology.
You lack the natural resources to produce the needed goods yourself.
We were solely price-driven in the past three decades to meet our “GDP growth targets.”
Moreover, the West was 100% confident about its long-term strategy to disintegrate Russia and, in the process, subjugate China completely. Hence, the strategy made a kind of sick sense since China would become, in this case, a colony. This effort has failed.
And this is understood in the West and strategies are being adjusted to the new reality. I think if you are the West and you assume that you are going to lose the Global South (BRICS) as colonies, you would be entirely right to try to stop importing from China.
I need to be very careful here to make it clear what I mean, since it is critical. Western countries consider China to be an enemy for decades to come. Maybe not the Western people themselves. Maybe not even the politicians. But these are the guidelines provided by the Western oligarchs after the subjugation of China failed. From this perspective, it is entirely the right thing to do to reduce imports from China. Especially imports of critical goods on which you are dependent.
To make it a little clearer to everyone: I’m not saying that objectively China is the enemy of Western countries or that Western countries should generally cut trade/imports from China. That would be oversimplified. While the Western countries (colonies of their oligarchs) are forced to be hostile to China, trade with China, especially since we are talking about a high share of critical imports, is counterproductive. And therefore, the withdrawal from Chinese markets and imports is the right thing to do. (Bear with me, I’ll explain that in detail.)
Why is withdrawal from Chinese markets the right thing to do?
The West transformed itself into a service economy. Real assets are still produced, but not in sufficient numbers to buffer the impact of a sudden cessation of supplies. And this is definitely not only what COULD happen but what most likely WILL happen if we continue the current path of global escalation.
Moreover, I’m repeatedly saying that each nation should first utilize its own population to produce all critical goods and assets as reasonably possible and THEN import the rest.
How to withdraw?
The actions of the Americans are, unfortunately, entirely misled. I’m afraid they can’t act differently since they taught themselves for decades, if not centuries, to only speak with other countries from a position of power. If they want to withdraw from trade with China or at least reduce or eliminate the trade deficiency, they should do that diplomatically and over time. And without setting Taiwan on fire.
I will come to that later, but the breakup with a crowbar could lead to disastrous consequences for the American population if it comes to a sudden breakdown of supply chains. But maybe this is what they want: creative destruction. Pointing their finger at the big bad Chinese for their intensive domestic problems and the acceleration of reindustrialization.
Maybe. I’m not sure whether that’s a good idea… Rather not!
The same goes for Germany and Europe. The remaining competitiveness of German industries is explained by the use of ultra-cheap Chinese components in their products, which are only assembled in Germany and have the “Made in Germany” label.
With the available workforce, Germany should stay as industrialized as possible. The problem in Germany is that millions of workers will retire within the next few years, and from a certain perspective, it is a blessing for Germany that they don’t need to produce everything themselves.
When Ukraine collapses, and the big refugee stream arrives from Ukraine, maybe Germany will be able to assimilate another 2-3 million younger people into its cheap workforce. This could help to overcome the demographic problems for another 5-6 years.
The Americans don’t have these problems. They could and should reindustrialize by taking back as much production as possible from China. This is in its national core interest, without any kind of China-bashing. Employ your people first, then do what you want. And you have whole colonies within the USA of millions of homeless people… America First.
But you should do it diplomatically, peacefully, over time, without causing war at the same time. In fact, not as you (Yannet Yellen and Tony Blinken) are doing now.
Are all Western countries going to stay “Western countries”?
No, of course not. As I said, with the fall of Ukraine, more European countries will join the BRICS trading space, beginning with Hungary and, step by step, spreading.
This is the reason why we should expect major escalations short of a hot and nuclear war between Russia and the West as soon as the final defeat of Ukraine occurs.
Note: The proximity of the Russian victory is not measured in miles of the Russian frontlines to the Hungarian border. Ukraine can and will probably be defeated militarily east of the Dnieper, after which a general collapse will take place in the whole country.
The proximity of victory is measured in the number of people who are still alive in Ukraine and who are being forcefully conscripted and killed in East Ukraine.
So, it is not measured in miles but in the number of breathing people who are already dead men walking as the defeat of Ukraine arrives.
Countries like Serbia, Hungary, and (hopefully) our Bulgarian brothers, but even countries like Austria and Italy could break away from the Western camp over time and join the BRICS trading space.
And even in this case, I will advocate: First, take care of your people and then engage in foreign trade, etc. This always means taking back what you outsourced UNTIL you completely satisfy your people.
I know this is oversimplified because you should consider the higher prices for domestic production, but if you realign your economy on domestic-centric consumption and production, you eliminate a lot of external competition pressure. As far as you have access to the corresponding resources and, in the best case, access to the sea or to the Belt and Road Initiative infrastructure.
That’s why I always add the word “reasonable”. However, for many reasons, it is not possible to fully source your production domestically. I admit that, and it should be noted.
Will all of them need to follow this approach?
Again, as long as you do every reasonable thing to employ your own population, you can do whatever you want. And in this case you could continue full trade with China and the BRICS infrastructure.
I want to highlight a simple fact to underscore my approach: Why didn’t Russia intervene in Ukraine in 2014? All the sacrifices that they made today wouldn’t be necessary. Well, exactly for the reasons outlined here before. Russia depended on all critical production technologies, financial access, medicine, spare parts, etc. on foreign actors.
It took Russia eight years to prepare itself to enter Ukraine and survive the ensuing sanctions. It must be noted that it would NOT have been possible without China's manufacturing capacities, machines, and tools.
China and Russia are strategic partners. Or “symbionts,” as I labeled them in Economics and Empires 4 almost a year ago. That’s why Russia could lean on China. If Russia had a similar attitude to China as the West did, Russia would now be doomed. And we all, as well, since we would most likely end up in nuclear Armageddon.
Be self-sufficient as much as reasonably possible for your individual country!
Is China evil and guilty of “overcapacity,” etc.?
Finally, is China the evil boogeyman that made us all dependent on its “overcapacity” like heroin?
No. China didn’t do anything wrong. It was the idiotic West that decided to outsource its production to China because it was always clear to the West that China would eventually fall after Russia and become a colony. A colony that could be used for production as well as the other Asian states with big populations, such as India. These are purely racist considerations.
The West will have a small wealthy population based on services, and the “subhumans” in Africa and Asia will provide the resources and the machined goods for our physical needs. Therefore, staying poor, shutting up, and being thankful to be able to work and die in the big factories for the Western demands.
Except that this did not happen. The opposite happened. The West is about to fall, and the rest is to become rich. Too bad.
I hope you all understand the loop. I’m not advocating relocating production back home from China because China is bad. It isn’t. And it didn’t do anything wrong. It simply did everything from its national interest view.
The West made a big mistake decades ago by outsourcing its production in anticipation of world domination. It has failed, and now panic spreads.
I think we will experience a lot of “readjustment” of supply chains worldwide.
[i] Edited by Piquet (EditPiquet@gmail.com)
Aleks, thank you very much for this terrific analysis! I have close friends in Germany. There is no hope for this country. Because people are clueless. They have no clue. They listen to their mass media and believe it. They hate Putin. Nordstream did not ring any bell for them. They consider that tough times might come so instead of 3 vacations per year they will have 2. So naive. The reality will hit them hard.
Excellent. Prescient. Keep writing.