TM, ®, Copyright © 2009 Piero Scaruffi All rights reserved.
- (january 2009)
The new new world order.
A number of simultaneous events, more or less caused by the financial crisis
of 2008, may have a profound impact on how we view the world.
To start with, the first casualty of the financial crisis has been not a
banana republic of Latin America or a poor failed state of sub-Saharan Africa
but Iceland, a stable and democratic country of northern Europe whose citizens
form a model middle-class. Then we learned that unemployment has skyrocketed
not in Bangladesh or Bolivia but in Spain, reaching 14.4% and heading towards
20% by the end of 2009. And that it's not Pakistan that is about to go bankrupt
but wealthy Austria (as the Austrian newspaper Die Presse's headline went, "When, exactly, will Austria go into bankruptcy?")
The Baltic republics were the success stories of the break up of the Soviet
Union until Latvia's economy collapsed (GDP fell 10.5% in the last quarter of 2008), at the same time that Russia controls the flow of natural gas to the whole of Europe. Suddenly it's the "westernized" former Soviet republics that look
in trouble (particularly Ukraine) and not the ones still run by communist-style tyrants.
The USA announced a GDP contraction of 6.2% for the last quarter of 2008, heralding similar contractions for 2009, while China confidently predicted an 8% growth rate for its economy.
At the Davos conference in Switzerland, the USA
was embarrassed to hear political leaders from Russia and China tell the world
that the USA mismanaged its economy and that corruption is rampant in the USA:
wasn't it the USA that traditionally lectured Russia and China about economic
mismanagement and corruption?
The most powerful politician of Europe, chancellor Merkel of Germany, lectured
the USA about the danger of protectionism: wasn't it the USA that traditionally
lectured Europeans about this danger?
China published a report on human rights in the USA, exposing all the social ills that plague the USA society:
1.4 million violent crimes (including 17,000 murders),
1.35 million high-school students threatened or injured with a weapon at least once,
2.3 million prisoners,
widening wealth gap, increasing number of homeless people
(and they forgot 47 million people without health-care coverage),
37.3 million people living in poverty,
government wiretapping, torture of political prisoners,
and, last but not least, the USA sold weapons to more than 174 countries. The list goes on and on forever. Wasn't it the other way around until recently?
Even facts that pre-existed the financial crisis seem to paint a picture of
inversion of roles. For example, Nigeria got a free election and its histrionic
strong man Obasanjo retired at the same time that Italy reelected histrionic
strong man Berlusconi as prime minister.
At the same time that Sri Lanka is ending a long civil war thanks to a model
government, a British lawyer was indicted of accepting a bribe to protect the
Italian prime minister, Japan's finance minister was forced to resigne after
showing up drunk at a press conference and Illinois' corrupt governor
and the USA senate accepted Roland Burris, the man appointed by Illinois'
disgraced governor Rod Blagojevich. These are news that we used to read about
African or Latin American countries.
The multi-national organizations set up after World War II, and broadly
controlled by the old powers, are rapidly losing their credibility. Brazil, India and Japan are not permanent members of the security council of the United
Nations, but tiny France and Britain are. Brazil and India are not even members
of the G8.
Russian prime minister Vladimir Putin has criticized the World Bank, IMF and World Trade Organization as anachronistic organizations. Only the Western powers
disagree with him.
The filthy wealthy region of the world was the oil-rich Middle East, correct?
Well, in 2008 the Arabs lost $2.5 trillions in the financial crisis
The USA lost about $3.6 trillion from the financial crisis
The GDP of the USA is $14 trillion, so the USA lost 1/4th of GDP.
But the combined GDP of all Arab countries is only $2.3 trillion,
which means that the Arab world lost more than 100% of GDP.
The combined wealth of Arab soevereign wealth funds was
$2.5 trillion in the spring of 2008
On the other hand Western and Japanese plans to build electrical cars have soon
turned the attention away from oil and towards lithium. Lithium is not found
in the Middle East: it is found in Bolivia, that owns about 50% of it
On the other hand,
Iraq is emerging as a modern democracy at a time when Italy is turning into
a banana republic (it never really was much more than that) and Iraq may soon
experience an economic boom at a time when Spain is becoming a third-world
country and at a time when Israel looks more and more like the rogue state of
the Middle East.
Another Arab country is doing well: Libya, long the pariah. Its leader Qaddafi
is suddenly centerstage in Africa. He has been elected "king of kings" of the
African Union, and his ambition is to lay the foundations for a United States
of Africa. Having abandoned Arab nationalism (or whatever it was that made him
side with Islamic terrorists), Qaddafi has embraced a George Washington-style
mission to liberate and unite the former African colonies. He sounds like
a man of vision when compared to the son of Africa who rules the USA: one
(Qaddafi) is busy architecting the future while the other one (Obama) is busy
trying to save an obsolete banking and manufacturing infrastructure.
See also The rest of the world is paying a higher price.
TM, ®, Copyright © 2007 Piero Scaruffi All rights reserved.
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