The World Divides

Seventy-Five years ago, Winston Churchill proclaimed that the world was dividing into two camps. The Cold War had begun. Last week Vladimir Putin made the same observation to another audience.

He lacks the rhetorical polish of Winston Churchill. And indeed, he hasn’t the mantel of victory that the British Prime Minister had following World War II. But last week, Vladimir Putin delivered a message that was, I’m afraid, as prophetic as Churchill’s Speech 75 years ago in Fulton, Missouri.

Called the “Iron Curtain” speech, Churchill vividly described how the Soviet Union had effectively taken over most of Eastern Europe. In a few minutes, he crushed the United States’s dream of a cohesive, peaceful world following those long years of conflict. Churchill was a splash of cold water on the naive dreams of postwar harmony. What came instead was over 40 years of “Cold War.”

Last week, Putin delivered the same message, albeit to a different audience. He spoke before the Shanghai Cooperation Organization, sounding more like an economist than a Statesman. And we all know how boring economists can be!

Putin identified the opposition as those promoting a “Uni-polar” world. That was a diplomatic way to refer to the “New World Order advocates.” Principally, he was taking direct aim at the United States and the European Union. And all the players that you’re familiar with: the United Nations, the Bank for International Settlements, the World Economic Forum, and so on.

Perhaps it was a translation issue, but Putin set aside the soaring rhetoric of an “Iron Curtain” and called the collective West’s actions “absolutely ugly and unacceptable.” Thus, Putin drew the line between the old guard, America, and Europe. And the new guard, Russia, China, India, Iran, and perhaps others, including Brazil.

And as deftly as Churchill called the division of the old world, Putin has called out this new Global cleaving. It seems to have all been precipitated by Russia’s Special Military Action in Ukraine. The conflict escalated rapidly, from a limited incursion by the Russian military to almost universal sanctions by the Uni-polar countries of the West. Without a doubt, Ukraine has become the defining event in this Global Division.

Now, if the old “Cold War” past is a prologue to this new “Cold War II,” then there are some things we can expect to see. First, military and diplomatic face-offs will likely occur. But also, there are likely to be other areas of conflict, such as an economic struggle. Countries will use Financial and productive leverage to weaken and diminish the opponent. The US was very effective in using its economic might against the Soviets.

The US was the world’s industrial and manufacturing powerhouse throughout the Cold War. Unapproachable and unstoppable, this country could produce nearly 100% of all it required. We locked up what little we needed to import, such as Oil, by treaty and agreement.

The Soviets and the Chinese languished far behind the Americans in manufacturing and production. American agriculture was second to none, providing exports to countries worldwide.

Except for agriculture, none of those American superlatives exist today. America no longer has an economy that can supply all that we require. America is the most unstable economy in history. Last year, America had to import $1 Trillion worth of goods to maintain a commercially operating system. All of the troubles in the so-called “Supply Chain” are, in fact, due to our lack of production.

The European Union is not far behind in its dependence on foreign suppliers. Right now, the shortage of Russian Oil drives the headlines. But overall, the EU’s trade deficit follows only the US as the two enormous trade deficits worldwide.

On the other hand, the leading trade surpluses come from Russia and China. With a trade surplus in Iran and Brazil. India’s recent deficit has been on the high price of energy imports, but by aligning with Russia, that should disappear.

In general, the chips are all on the other side of the table, driven by the two largest exporting economies in the world, Russia and China.

While on our side of the table are the two largest importing entities: the US and Europe. Entities whose economies can not operate without vital imports that come from that other side of the table,

We see this in the European’s struggle for energy and the American’s struggle with the “Supply Chain.”

The world has completely changed 180 degrees. The West’s economic dominance of the last Cold War is gone. Today the collective West is dependent on other suppliers, principally Russia and China.

The old television commercial said, “This ain’t your granddad’s Cold War.” The problem for the West is our Granddad is still in power.

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David Reavill

David Reavill writer + finance +iconoclast + hiker + Pennsylvania #valueside daily podcast + medium + meditate valueside.com/links