Brexit: Beware the Ides of March

Ides of March

https://nypost.com

 

“My take is that the EU leadership is far more interested in punishing Britain for voting for Brexit than it is in its own immediate economic interests. The thing Brussels has to fear more than anything else is that if Britain comes through Brexit in good shape, and especially if it’s seen to benefit as a result, other countries could head for the exit, and still others could start treating the threat of a referendum as a useful bargaining chip in their disputes with the EU. Thus, I’ll predict that the EU leaders will either reject the Chequers plan outright, or accept it but with demands for alteration that will be politically unacceptable in Britain.”

John Michael Greer – Ecosophia – An Astrological Interlude: Brexit

 

“… many European politicians have made a cold calculation that a ‘successful’ Brexit could create political momentum in their own countries for looser ties with the EU.”

BBC News – Brexit: sympathy without support from Europe’s right

 

In Shakespeare’s play Julius Caesar, the soothsayer warned the Roman dictator to “beware the Ides of March”. Those of my readership who are classical history buffs will already know the outcome: the great Roman leader was stabbed to death by his closest allies in an act of brutal betrayal.

Just as in Roman times, March is also a critical month for Great Britain as the clock ticks down to when Britain formally leaves the European Union (EU) on 31st March 2019. Britain’s Prime Minister Theresa May would not be human if she doesn’t occasionally wake up, sweating, in the middle of the night in 10 Downing Street at what the outcome will be for the British nation.

The truth is, nobody in Europe knows what the outcome of the Brexit negotiations will be, whether a deal will be agreed or not and whether a deal, assuming it is agreed, will be of a “soft” or “hard” version. As somebody who successfully predicted the narrow Leave victory at the beginning of 2016 on this blog, I thought it would be sensible to review whether my forecast of a “semi-soft” Brexit still stands.

Before I proceed, I will need to discuss an issue that may concern some of my readership. John Greer, the political thinker and analyst who I have referenced many times on this website, recently wrote an update on Brexit on his blog Ecosophia which I will reference in my post. He uses a very unconventional methodology to his near-term forecast of the Brexit outcome, astrology, which he considers a reliable approach to forecasting the future.

My own view is that I know nothing about astrology and have no idea if it works or not. However, if Greer’s approach works for him, and more importantly the underlying rational political logic and analysis dovetails with my own research and thinking, I see no reason why I shouldn’t reference and use his forecast in my own blog.

With that out of the way, I will proceed with my latest thinking on Brexit.

The underlying logic behind my forecast of a Brexit deal based on a “semi-soft Brexit”, largely along the lines of the Chequers plan, assumes that EU member-states will be primarily guided by their immediate economic and strategic interests. The UK is a major economic and military power and a no-deal outcome would negatively impact the EU27 economies, risk triggering a European recession and potentially lead to a surge in support for populist parties across the Continent.

Strategically, a toxic Brexit divorce would shatter NATO and destroy public support for the UK’s military protection of central-eastern Europe from Russian revanchism. With Russia, Turkey and America increasingly hostile to the European Project, refusing to engage with a soon-to-be Brexit Britain would be an act of strategic madness by Europe’s leading powers.

The hostile reaction to May’s Chequers plan, which involved painful concessions by the Prime Minister and the loss of two senior cabinet ministers (David Davis and Boris Johnson), by the EU would suggest that my assumption was wrong. It looks increasingly clear that the major centres of power within Europe, Brussels, Paris and Berlin have decided that preserving the integrity of the single market is more important than protecting existing economic and geo-strategic ties with Great Britain. There can be no “a la carte” Brexit, whereby Britain is partially in and out of the single market which is the core of May’s Chequers plan.

Either you are fully in, including signing up to freedom of movement for EU citizens, the Norway option, or you are fully out, with limited access to the single market, known as the Canada option.

Recent headlines have suggested that the EU are softening their position to save Theresa May as her political enemies surround her with their (metaphorical) knives. Reading the small print of these articles indicates no such thing. The EU are not prepared to make any substantive concession on Chequers and are only prepared to allow vague wording in the political declaration on the future relationship between the EU and the UK to help May push it through Parliament.

The calculation within European capitals is that a mutilated Chequers Minus package, once Barnier has had his pounds of flesh, will be a de facto ultimatum to the British government. Take it or leave it.

Certain issues will be fudged, kicked down the road and flowered up in vague wording but the core of the withdrawal treaty will be on the EU’s terms. As Ambrose writes in the Telegraph, Barnier’s game plan was “… was to pressure the Government into whittling down Chequers: either accept the Customs Union, swallow EU law across the gamut of services and goods, and give way on free movement or accept the thin gruel of a limited goods deal – one that should lock in the EU’s £90bn trade surplus, without reciprocation on services, where the EU has a deficit.”

It is precisely these alterations that John Greer was presumably referencing when he writes that “the EU leaders will either reject the Chequers plan outright, or accept it but with demands for alteration that will be politically unacceptable in Britain.” A humiliating Versailles-style settlement, assuming that the British government carries on negotiating on the basis of Chequers, is likely to lead to either the collapse of negotiations should the May team decide that the deal is unsellable back home or a later collapse as the Tory party and/or the Parliament reject the proposed settlement.

For any Chequers-Minus/Barnier deal to survive the ordeal of getting through the Conservative cabinet and Parliament, Prime Minister May will need substantial support from Labour and the Welsh and Scottish nationalists to win the vote. This is not inconceivable. Berenberg Bank, who I have referenced before, continue as their base case (60%) that precisely such a scenario will occur, although they are forecasting a 40% chance that the deal will be rejected.

There are a number of other scenarios that could play out over the next few months.

  1. Canada is resurrected

The first is that May, under pressure from her Brexit hardliners and the refusal of the EU to engage with her Chequers plan, adjusts and aims for a Canada style free trade agreement. This is unlikely to happen since a Canada style deal would not solve the Irish border quandary of ensuring no hard border between Northern Ireland and the Irish Republic post-Brexit. May committed to precisely such an undertaking in December 2017 with the EU27.

  1. May toppled from power

The second is that Tory backbenchers will attempt to topple May from power in the coming months. Eurointelligence, in their briefing today, note that should May be toppled by the former Foreign Secretary Boris Johnson, “…he would dump Chequers and call for a Canada-type deal. This would lead to a head-on confrontation with the EU over the Irish backstop, which will remain unacceptable to the UK in this particular scenario. If the EU blinks over Ireland, there will be a compromise. Otherwise, a hard Brexit.

The prospect of May facing a leadership contest is growing amid widespread grassroots rage about Chequers and the manoeuvrings of ambitious Tory politicians sensing blood.

  1. EEA comes back

The UK Parliament rejected in a previous vote a proposed joining of the EEA, also known as the “soft Brexit” option which would involve remaining within the single market and customs union. Both political parties have rejected this option, for two reasons. The first is that Britain would become a rule-follower without any input or influence of the shaping of the laws and regulations within the EU27. The second, even more politically explosive, is that Britain would not regain control over its borders.

Immigration was a key issue during the referendum campaign and many MP’s are wary of the backlash from Leave voters should they bounce Britain into a soft Brexit which doesn’t involve “taking back control” of our immigration policy and borders.

  1. Article 50 extended

Should negotiations collapse or the withdrawal treaty is rejected by the UK Parliament, the prospect of crashing out of the EU without a deal will lead to widespread calls for Article 50 to be extended. For Britain to postpone leaving the EU would involve the approval of every EU government across the EU28, including the UK.

The EU have made it clear that they are reluctant to prolong the Brexit agony and would be loathed to extend Article 50 beyond May, when critical European parliament elections occur. The prospect of dozens of UKIP MEP’s returning to parliament would be intolerable to European elites already frightened of the rising tide of populist and nationalistic forces across the Continent.

The only realistic way Article 50 could be extended is if a deal is close to completion and would be approved on a time limited basis only.

  1. Brexit revoked

In the event of a failure to reach an agreement, the government could agree to revoke Brexit, subject to the approval of the UK Parliament and the EU27. This strikes me as highly unlikely. It would lead to unprecedented political and constitutional chaos with the prospect of serious civil unrest from enraged Leave voters.

Conclusion

The political and financial elites of Europe assume that Britain will swallow whatever package is eventually hammered out by Barnier and his team since the prospect of a Hard Brexit is unthinkable. Yet, the same elites said the same thing before the Brexit referendum about the possibility of the British people voting Leave or the Americans voting for Donald Trump in November 2016.

Having read the various no-deal reports I’ve reached the conclusion that assuming that the UK ensures interim holding arrangements with its neighbours the worst-case scenarios of food and medicine running out will be proven wrong. A hard Brexit, with Britain falling back on WTO will likely lead to a degree of disruption for the first few months but the worse-case predictions are unlikely to come true.

There is a reasonable chance that the UK could economically boom post-March, thanks to the further fall in sterling, the saving of the 40 billion divorce bill (equivalent to 2% of the British economy) and inflationary wage pressures on the economy as the supply of foreign EU workers dries up. Rising real wages for the bottom 80% would increase consumer confidence and boost the UK economy.

As Bernard Connolly, the European Commission’s former currency director and founder of Connolly Associates, said a weaker pound has already led to a big improvement in the UK’s current account – when adjusted for the jobs boom and full employment, the metric that matters. A further slide would make the UK economy even more competitive and narrow the deficit further.

If I summed up my thoughts in one sentence, it would be that my head says there will be a deal but my gut is telling me it will be a no-deal/hard Brexit.

Overall, I now consider the chances of a no deal outcome (e.g. Hard Brexit) equally likely as a deal, whether based on a Canada-type deal or a Chequers Minus/Barnier package.

I will provide a further update in the coming months as negotiations proceed.

As always, I welcome your feedback and recommend, if you haven’t already, subscribing to my blog for future posts at the bottom of the page.

Brexit: Beware the Ides of March

The Sleepwalkers

climate-change

https://bigthink.com

 

“During the spring of 1977 and the summer of 1978, the Jasons met to determine what would happen once the concentration of carbon dioxide in the atmosphere doubled from pre-Industrial Revolution levels. It was an arbitrary milestone, the doubling, but a useful one, as its inevitability was not in question; the threshold would most likely be breached by 2035.

The Jasons’ report to the Department of Energy, “The Long-Term Impact of Atmospheric Carbon Dioxide on Climate,” was written in an understated tone that only enhanced its nightmarish findings: Global temperatures would increase by an average of two to three degrees Celsius; Dust Bowl conditions would “threaten large areas of North America, Asia and Africa”; access to drinking water and agricultural production would fall, triggering mass migration on an unprecedented scale.

“Perhaps the most ominous feature,” however, was the effect of a changing climate on the poles. Even a minimal warming “could lead to rapid melting” of the West Antarctic ice sheet. The ice sheet contained enough water to raise the level of the oceans 16 feet.”

The New York Times Magazine – Losing Earth The Decade we almost stopped climate change

 

“…without fossil fuels to prop it up, our entire way of life will come crashing down. We could have weaned ourselves off fossil fuels if we’d followed through on the promising developments of the 1970s, but we did the opposite, boosting our fossil fuel consumption per capita way above what it was in that decade. Now our politicians are trapped; keeping the beast fed requires more and more drastic measures, and even those are just a matter of buying a little more time at the cost of an even worse outcome down the road.”

John Michael Greer – The Ecosophia

 

The world is sleepwalking towards a catastrophe.

It won’t be like the Hollywood movies, when the world ends in a week and there will definitely be no superhero arriving to save us from our own self-inflicted mistakes.

For those readers who live in a cave, just a few of the headlines this summer give just a taste of what will come in the decades to come as we plunge further into the nightmarish world of resource depletion and accelerating global warming. Unprecedented forest fires in California, intense fires in Greece which have incinerated dozens of men, woman and children, disastrous crop failures across the world, drought in Iran and Iraq, riots in Haiti due to rising food prices and the emergence of violent piracy off the coast of Venezuela.

The media, with the odd exception, have failed to “connect the dots” on these interconnected crises, which can be summarised as the rising tide of system failures and collapses caused by the bigger forces of the inexorable decline in the supply of readily available fossil fuels and the global impact caused by climate change.

The tragedy is this future, which is baked in now, was discussed and warned about publicly nearly 50 years, during the 1970’s. I have already discussed the Limits to Growth report, published in the early 1970’s which explored the impact of the depletion of non-renewable resources on our industrial civilisation in my post “winter is coming”.

For this post, I would like to focus on a subject I have discussed less, which is climate change. The quote from the New York Times article references the Jason’s, a group of scientists, who painted a grim but prophetic report to the US government on the implications of increased carbon emissions would have on the planet in the late 1970’s. That is now happening.

According to a recent report by an international team of scientists, under current trends, the Earth is heading towards a “hothouse climate”, which will see huge swathes of the planet become uninhabitable and 200ft sea level rises. Crop failures, rising sea levels and extreme heat waves and droughts will cause immense long-term damage to the foundations of our globalised economy.

Rising sea levels threaten our mega-cities which are the focus of the transportation of goods and agricultural produce. The respected international think tank Chatham House wrote a report on this recently, titled “Chokepoints and Vulnerabilities in Global Food Trade”. The writers of the report warned of “… the risk of severe disruption at certain ports, maritime straits, and inland transport routes, which could have devastating knock-on effects for global food security.”

05

Chatham House – Maritime, coastal and inland chokepoints and major shipping routes

 

During the 2007/08 oil spike, which had a corresponding impact on food prices, countries around the world suspended food exports as the global poor started to riot over rocketing prices of basic foodstuff. Any disruption of the key choke points of global trade in key goods and food produce would act as a trigger for a wider breakdown of global supply chains.

In the medium term, rising global temperatures will devastate significant parts of the world, including large areas of North America, Asia and Africa, which I discussed in my review of Mossaddeq Ahmed book on resource depletion and climate change. By the 2030’s, it looks likely that climate change will be severely impacting those parts of the world along the tropics and triggering mass migrations to cooler parts of the world.

I read a recent Guardian article on the “perfect storm” developing in Iran, where a drought, the worst in half a century, depletion of water supplies, a disastrous crop, hyperinflation and sanctions is contributing to a growing sense of despair among the people. Protests are erupting on a near daily basis, many of the youth dream of fleeing and there is open talk that the country is doomed. Whilst there are specific factors unique to Iran which have brought forward the crisis, the same challenges are present throughout the Greater Middle East and North Africa.

As I note in my post Islamic Volkerwanderung, the likely outcome will be that by the 2030’s, enormous waves of Muslim refugees will be fleeing this vast zone and will try to move into Europe. How big and violent the coming mass migrations will be remains to be seen but it is unlikely that the tens of millions on the march will not be prepared to fight their way to safety, even if that means slaughtering the existing inhabitants of Spain, Italy and the Balkans in the process.

Mass migrations will impact other parts of the world. Within the United States, rising sea levels, the emergence of Dust Bowl conditions across the south-west and mid-west will see internal migrations within the United States. Central America, already deeply troubled by failed states, violent narco-groups and economic collapse will provide further mass instability, with huge waves of refugees attempting to flee to the relative safety of America in the coming decades. The offshore tax havens of the Caribbean are already starting to collapse, and if the violence and piracy get worse, you may see the collapse of tourism in the future.

It is not all doom and gloom of course. Certain major powers will be relative winners in this new era of scarcity industrialism. Russia, already partially withdrawn from the globalised economic system due to Western economic sanctions, is rich in natural resources, food and land. Under President Putin, Russia has aligned itself with the rising power of China and integrated into the emerging Eurasian network of trading and railway links spreading across China into India, Central Asia and European Russia. This is called the Belt and Road Initiative and it is creating a new economic order centred on Beijing and Moscow.

pic+belt+and+road+initiative

http://www.thecitizen.co.tz

 

Prior to the election of President Trump in 2016, I discussed the possibility that Trump would pivot to Moscow and separate the Russians and Chinese. This now strikes me as unlikely to happen due to the hostility of the Washington military-industrial establishment and the growing economic clout of the Chinese. President Putin appears to have bet on the Chinese horse and there is little President Trump can do to stop that.

The jagged withdrawal of the Americans from their empire is a sign that President Trump will be happy to make deals with the rising Russians and Chinese in the coming years in periphery areas like South Korea, Iran, Turkey and Europe. I fully expect that Trump will push forward the withdrawal of American troops from Germany, South Korea, Turkey and Afghanistan as the American empire is slowly wound down. Under President Trump, the prospects of a terrifying Twilight Last Gleaming scenario appear to have diminished but the prospects of a future crisis which shatters global confidence in American military and economic prestige remains.

As I discussed in my review of a recent book on the coming end of American hegemony by 2030, President Trump grand strategy is founded on the rebuilding of the nation-state, in particular the industrial base, along with a partial withdrawal from the empire business overseas. This offers one peaceful genteel scenario which preserves America as a great power as we transition into a new world where the Eastern powers dominate.

Since I wrote my article “winter is coming”, I have had a chance to review my forecasts made in 2016 and this is an opportunity to expand my thoughts on the likely probabilities as we sleepwalk into the death of the old world.

  • Europe: I have shifted my timeline on the likely end of the eurozone from around 2020 to 2030. Elite and public opinion support membership of the eurozone across the member-states despite the growing pressures on the common currency and sufficient political will remains to prop it up for another decade. I anticipate that eurozone debt will be mutualised by the ECB during the next financial crisis which will kick the can down the road for a little while longer.

 

 

  • Global economy: Taking into consideration the Limits to Growth business-as-usual modelling, the super-debt cycle and the likely peaking of fossil fuels by 2030, it looks increasingly likely that after 2030 the global economy will unravel. This will be a process and will impact certain parts of the world worse then others. Parts of Africa, Central America and the Middle East look extremely vulnerable to economic collapse and will likely disintegrate next decade. The core wealthy enclaves of industrial civilization, North America, Europe and East Asia may only face systematic crisis after 2030.

 

  • I have reviewed the German military report into peak oil and the dire medium-term implications on the global economy before and concur with its thesis that in the medium term “…the global economic system and every market-oriented national economy would collapse.” I expect the global economic system to collapse by the 2040’s. This will include the global pension industry which will likely face insolvency during the 2030’s leading to the bankruptcy of global pension schemes by the 2040’s.

Pension

Research Report: Resource constraints: sharing a finite world

 

I finish by referencing a recent book I have recently finished reading, called Stars Reach by John Greer. The story is based hundreds of years after the end of industrial civilisation and is a superb adventure story about a young scholars’ journey to find a fabled place called Stars Reach.

The novel explores the shrunken post-Global Warming and resource depleted world of America which has largely lost touch with the rest of the world. It is at times a harrowing read and the demise of the old world, our world, is difficult to digest at times. Yet the world described by John Greer feels realistic and incredibly well researched, taking into consideration the likely climate of America in the 2450’s and the nature of the salvage economy which will likely emerge after the era of scarcity industrialism dies once fossil fuels become extremely scarce in the future.

This is our future and we should start preparing for epic changes in the coming decades.

 

The Sleepwalkers

Technological disruption and the looming Limits to Growth endgame

 

Robot

http://www.pinterest.com.au

 

“The Gefira team expects that the global economy will come crashing down as the oil price starts soaring again in the coming years.”

GEFIRA newsletter no 19 (subscription only service)

“True believers in the religion of progress are promoting these claims at the top of their lungs to keep from having to admit just how fast the decline is becoming. It’s quite possible that self-driving cars of a sort will come into use, but the death toll is likely to be even higher than the toll from bad human driving. As for the others, people have been insisting that automation will put everyone out of work any day now since before I was born, and artificial intelligence has been a will-o’-the-wisp hanging in the notional future since before that. Expect them shortly after cheap nuclear fusion comes on line and you begin commuting to work via jetpack.”

John Michael Greer (Ecosophia)

 

Reader, you may be wondering what the picture represents.

It is an automated robot, powered by air or water that moves its arm, pours liquid into a cup for the services of its human owner. The catch is that the human owner was called Philon of Byzantium and was made in circa 250 BC.

For those readers who think that incredible technological disruptions like automated robots are a new phenomenon, think again. They were already in existence prior to the birth of Jesus Christ.

I am not here to belittle technological developments, far from it, but it is a useful reminder that exciting and quasi-miraculous technological devices have been around for thousands of years in human history. Yet, just as the robot invented by Philon didn’t stop sophisticated Ancient Greece eventually falling into a Dark Ages, the modern-day equivalent will not prevent the disintegration of our industrial civilisation into a future deindustrial Dark Ages.

And that is the challenge of this post. I admire technology and have written a blog post on the potential technological and investment opportunities of the emerging world of crypto-currencies and the blockchain technology that underlies it. I attend tech events to keep up with the latest advances in Artificial Intelligence (AI), robotics and automation. There are exciting developments in this space, with real commercial potential and room for significant technological disruption in the coming decade.

Yet, as long-time readers of this blog can attest, the dirty physical reality is important as well. Without sufficient flows of oil, the lights don’t go on, the cars don’t move and without electricity that computer in your room is a useless piece of junk. The bitcoin which is held in the ether might as well not exist without fossil fuels which is still the life blood of our industrial civilisation.

The experts at the Financial Sense website recently did a recent fascinating podcast on the looming supply crunch in the global oil markets. Existing conventional oil reserves are depleting at 6% annually, investment by the major oil companies has collapsed since the fall in oil prices after 2014 and despite the rise in American shale production, a major oil supply crisis will come within the next 2 to 3 years.

Rudyard Kipling, the British Empire poet, in his Barrack-room ballads, in 1892, wrote that never the twain shall meet in reference to the gulf between the the British and the inhabitants of the Indian subcontinent. When reading the online world of technology and what one could call the Limits to Growth sub-culture of sustainability, climate change and resource depletion, the same spirit arises. There is a vast gulf between the two worlds and my job is to attempt to bridge the divide.

With reference to my 2016 Limits to Growth orientated post, “winter is coming”, I will attempt to sketch out how I see the next 12 years of economic history develop with a particular focus on the looming waves of technological changes.

The financial data is indicating that some kind of technical or mild recession may hit the developed world in between 2019 and 2020 but right now, it doesn’t look like a re-run of the 2008/2009 financial meltdown that nearly destroyed the global banking system. I imagine that in the event of an economic recession, however mild, the printing presses of the central banks will flood the markets with billions of new euro’s, dollars, yen and sterling. This will postpone any relapse into recession but at the cost of increasing the inflationary pressures within the global economy.

One of my forecasts at the beginning of 2018 was that oil would hit $80 dollars which happened on 17th May 2018 on the back of tightening supply and worsening geopolitical tensions in the Middle East. As Ambrose Evans Pritchard notes in the Telegraph, leading investment firms are starting to predict of an oil spike to $150, which would be shattering to an oil starved Europe and trigger a major global economic crisis. The GEFIRA forecasting team are similarly predicting an oil supply shock around the year 2020 as referenced in the quote above.

The most likely outcome, although there are many variables at play, is that worsening trade relations between a Trump America, the European Union and China, a steadily rising oil price and the coming to the end of the economic recovery will precipitate a major systemic crisis by the early 2020’s. This will be a perfect storm, with oil and other commodity prices spiking, leading to massive demand destruction as the world plunges into another serious recession.

There will be an inflationary run-up to this crisis and we will likely see a bull market for owners of commodities, including oil, gold, silver and crypto-currencies. Of course, just as in 2009, the subsequent collapse will be spectacular with commodity and other “risk-on” assets likely to collapse. The political, geopolitical and social ramifications will be profound as well. A further round of pauperisation of the middle classes of the developed world will lead to a further wave of support for populist parties of both the nationalist right and the alt-left, just as we are currently seeing in Italy.

I would encourage my readers to view the following graph. The Limits to Growth business-as-usual (BAU) model is broadly in line with real world data and one can see that, even factoring in that the real-world data is marginally more positive then the model, by the early 2020’s the global economy will face the start of a protracted collapse.

futurism-got-corn-graph

So where does this leave technology? Certainly, for the next 5 years, the hundreds of billions pumped into AI, robotics and automation will yield some promising and exciting commercial transformations in banking, trade and industry.

Within the financial services industry, you will likely see a number of interesting innovations, including the emergence of bank chatbots, to deal with simple requests from the client, the continued shift from physical to digital through apps for a range of services and products and the mainstreaming of crypto-currencies and blockchain as a new asset class to be invested in.

Blockchain has significant disruptive potential and the insurance, trade sector and real estate industry are prime examples of where the distributed ledger system will be more accurate, transparent and reliable to the old ways of doing business. The following graph captures the likely disruptive wave of blockchain over the course of the next decade.

blockchain_evolution

http://www.investinghaven.com

 

The rise of tokens or cryptos could open up entirely new spaces to financialization. Fancy owning a fraction of a token of a Picasso painting? With a Picasso token you could do just such a thing within a decade. Tokens and the underlying blockchain technology will not be a technological savior but it will improve efficiencies in traditional industries, open up a new frontier for finance and will help new banks challenge the old banking dinosaurs.

Robotics have been around a while now. A modern-day car factory is filled with robotics efficiently creating car parts where there used to be humans doing the hard labour. Japan, at the forefront of the demographic winter facing the West, has invested a huge amount into robotics but with little to show for it. Despite a few gimmicks, cleaners, care assistants and primary school teachers have not been replaced by robotics yet.

The cost, complexity and severe limitations of the most advanced AI systems put huge challenges in extending the robotics/AI revolution outside the car factory plant. Until Japan succeeds, my assessment is that robotics will not prove a major disruptor before the Limits to Growth mega-trend kicks in by the end of the next decade.

There has been much chatter about electric cars in the media over the last few years. Electric cars are powered by the grid rather than oil. The grid, of course, is not powered by the air, but by either renewable’s, nuclear power or fossil fuels like oil, gas and coal. Electric cars, if adopted on a mass scale, would significantly reduce oil demand which would clearly help with the coming oil supply crunch. However, for this to occur, the pressures on the power grid will grow, trillions will need to be invested on an electric infrastructure and the global car fleet replaced.

This is doable for emerging countries like China and India, who have the opportunity when building new cities to construct a new electric based infrastructure but given the huge costs involved, electric cars will remain a niche sector in the advanced world. Overall, despite the shift to electric in China and other emerging market economies, electric cars, given the reasons listed, will not act as a game-changing disruptor in the coming years.

As for self-driving cars, even those involved in the industry consider the regulatory, technological and ethical issues at stake make it nigh impossible to happen on anything more then a few pilot cases. Like John Greer, I am highly skeptical of autonomous cars and consider that if it happens at all, it will be restricted to a few fixed lanes within cities or long-distance motorways.

American shale oil, otherwise known as “frackers” have had a tremendous decade boosting American oil production. I concur with Nafeez Ahmed analysis, which I reviewed here, that “… American unconventional oil and gas shale’s will likely peak around 2025”. Given the vast sums of capital flooding into the industry, the technological genius of the frackers and the commitment of American political leadership to the goal of energy independence, production is likely to go up over the next few years despite the severe depletion rates (compared to conventional oil and gas reserves).

In the grand scheme of things however, the frackers have only postponed the inevitable for over a decade.

If there is a theme when reviewing the technological disruptors facing us, it is that those technological innovations that will require billions, if not trillions, of investment in the “real world”, are unlikely to pass. This includes robotics, electric cars and for that matter, flying cars.

Apps based disruptors, like downloadable wallets on your smartphone, crypto-currencies on the ether and the shift to digital based activity like buying online, will continue to transform traditional industries. Apps are a good example of an innovation that doesn’t require vast expenditures on new infrastructure and are given the financial and energy restraints facing our world, it is these technological waves that will cause most havoc over the next decade.

The biggest wave of them all is the looming Limits to Growth mega-trend, the likely peaking of key economic metrics within the next decade and the end of economic growth itself. At some point, probably by the 2030’s, these constraints, with contracting fossil fuel supplies to the world’s industrial economies, will be a hammer blow to the tech industry. Power cuts, disruption to global supply chains, worsening climate change and growing global instability will shatter the assumptions underlying our existing political-economic system. Faith in economic growth, cheap and reliable energy and uninterrupted power supply will fade away.

Overall, my assessment is that significant technological disruption will continue to change existing industries, in particular within finance, retail, real estate and others ripe for disruption by the insurgents within the blockchain/digital space. However, none of this look likely to change our trajectory, as forecast by the Limits to Growth BAU model, of growing crises starting from around 2020 and accelerating beyond 2030 as the world population peaks.

…………………………………………………………………………………………………………………………………………………….

Existing readers will note that the President Trump did, as I forecast, utter a clear threat to his fellow NATO member leaders, to “go it alone” if they did not increase their defense spending.

As Reuters reports, “U.S. President Donald Trump told NATO allies in a closed-door meeting on Thursday that governments needed to raise spending to 2 percent of economic output by January next year or the United States would go its own way”.

We will see whether Trump does go ahead with his threats early next year but the trend is clear. American support and commitment to their European NATO allies is waning and the broader implications is worthy of a FI post in the future.

Technological disruption and the looming Limits to Growth endgame

FI Update – tottering pillars

“… (Merkel) sees the pillars of the world order teetering everywhere.”

Spiegel Online – “Merkel’s Dark View of the World We Live In”

“…Germany pays 1% (slowly) of GDP towards NATO, while we pay 4% of a MUCH larger GDP. Does anybody believe that makes sense? We protect Europe (which is good) at great financial loss, and then get unfairly clobbered on Trade. Change is coming!”

Trump tweet (10th June 2018)

Agrige21

romeartlover

 

During the final weeks of the 2016 presidential election campaign, I wrote a widely circulated blog post on how a President Trump would accelerate the disintegration of the post-war neoliberal world order.

The fiasco at the annual G7 summit of the major Western nations was a key moment when a horrified European political and security establishment woke up to this strategic reality. The imposition of tariffs against China by the Americans is just one sign that President Trump is deadly serious about ending the liberal globalised economic order using the leverage of American military, economic and monetary (dollar) power. Anybody who followed the Trump campaign closely, listened to his speeches or reads his tweets should not be surprised by these developments.

I intend to provide a short macro news update on a number of geopolitical fronts bubbling around the world.

Immigration:

The election of a populist, Eurosceptic and anti-immigrant government, formed by the hard-right strongman Matteo Salvini and the alt-left leader Luigi Di Maio, has already triggered a major crisis within the EU. The refusal to let a ship carrying 600 illegal migrants from Africa to disembark at Italian ports has led to a major crisis. In the end the new left-wing Spanish government agreed to let the migrants in.

Public polls show that 80% of Italians support the hard-line position of the new government, showing that the vast majority of Italians have had enough of the mass migration of migrants from the MENA region over the last two years.

The French President Macron condemned the actions of the Italian government, yet, his security forces have prevented African migrants from crossing the French border. Nearly three quarters of the French public, according to a recent poll, think that the nation could not cope with another wave of third world migration. Popular hostility will prevent President Macron from opening up French ports to further migrant boats, when the Italian Interior Minister Salvini stops the next boats heading to Italy.  If Macron does go against French public opinion, the political backlash will be fierce.

Angela Merkel is currently facing a major crisis in Germany over refugees, with her sister party the CSU demanding that refugees who have already registered in an EU country be rejected at the border. Whatever happens in the next week or so, and it is more likely then not that a compromise will be cobbled together, Merkel’s influence as a player is waning within the EU. Merkel understands that the world order is facing severe stresses but lacks the strategic vision to adapt to the changing times.

In my 2017 post Gotterdammerung, I wrote how the ideology of political liberalism was being replaced by a new populist consensus which rejected the permanent flow of migrants from the impoverished Third World. The recent Italian and Slovakian elections, where hard-line anti-refugee leaders came to power, just adds to the growing tally of populist governments across Europe. 2018 is increasingly looking like the year that the tide turned, finally, against the pro-migration consensus within the EU.

NATO:

In my 2016 post on the impact of a Trump presidency, I discussed how Trump may move to dissolve the NATO security alliance and how Europe would be pressured to start paying for its own defence. The disastrous G7 summit has shattered any remaining illusions among the European political class that business as usual would continue under a Trump presidency.

A rather entertaining Spectator article last week noted how Whitehall was in a state of panic about how Trump will perform at the next NATO summit. According to the Spectator, “…privately, ministers are in a panic and running out of options.” Without major commitments from European nations, in particular Germany, in the next few weeks to reach the minimum 2% spending on defence, a major clash is looming.

Based on Trump’s own tweets, his aggressive speech to his fellow NATO leaders last year and his long record of hostility to European “free-loaders”, I expect the NATO summit, due on 11th and 12th July, to be explosive. President Trump is likely to impose a final ultimatum on the Europeans, demanding within a certain timeframe that all NATO members comply with the 2% GDP spending on defence, otherwise America will withdraw from NATO or to that effect.

Brexit:

The recent votes within the UK Parliament on the Brexit bill hasn’t fundamentally changed my final forecast that Britain will end up with a semi-soft Brexit by the end of 2020. This will disappoint hard-line Brexiteers who favoured a hard/clean Brexit that allowed the UK a free hand to negotiate trade deals with the rest of the world. Hard-core Remainers, will be upset that Britain has still left the EU.

I suspect that the majority of the British electorate, who will be tired of the entire saga by the end of 2020, will be reasonably content with a semi-soft deal that brings back control over borders, provides greater freedom on regulations and laws for services but provides a frictionless trade for goods within the custom union or it’s equivalent.

It is likely that the final deal, will also involve association agreements on security, defence and other areas of mutual interest. 80% of NATO military spending, post-Brexit will be by member-states outside of the EU, making the UK a major force in military and intelligence matters. Should President Trump threaten to withdraw the American security umbrella to Europe, panic will break out and will strengthen those voices within the EU27 that want an amicable divorce with Great Britain.

Trade:

It is looking increasingly likely that Trump, will either this year or in 2019, impose 25% tariffs on foreign cars imported into America. This will primarily be aimed at the mighty German car industry and it is already causing fear and panic within Germany. The two biggest markets for German automobile companies are the US and UK, both of which are at risk due to potential tariffs and Brexit.

With German car industry facing a growing scandal over cheating diesel emissions, the risks of a meltdown of the car industry by the end of this decade is a serious danger. If Trump’s tariffs look inevitable, the domestic pressure to get a frictionless Brexit deal with the UK will become stronger.

The bigger picture is that the cycle of trade tariffs and counter-tariffs has begun between the major trading blocs (America, EU and China) and it will slowly unravel the process of globalisation over the past thirty years. Of course, a major trigger could accelerate this de-globalisation trend, one of which I will discuss next.

Global pandemic:

The World Health Organisation (WHO) has recently warned that a new strain of bird flu is the most likely candidate for a global pandemic that could potentially kill millions of people. The WHO “…has dubbed “disease X” – a newly emerging pathogen that could prove as destructive as the 1918 Spanish flu which killed between 50 and 100m people a century ago.” I haven’t covered this area much in FI, but the risks of a major pandemic occurring is considerably higher then the average citizen realises. John Greer has written in his books on the decline and fall of industrial civilisation that public healthcare systems will crumble as resources decline, public services are cut and states go bankrupt in the decades to come.

In this environment of a collapsing industrial healthcare system, the chances of a pandemic succeeding in going viral and killing millions is increasingly likely in the decades ahead. It is impossible to make a precise prediction on a pandemic, but the chances of a major global pandemic ravaging the world in the next decade is a reasonable one and it would shatter the just-in-time globalised economy. The film Contagion brilliantly shows how a modern industrial society effectively locks down in the event of a major pandemic.

The limits to growth business-as-usual model, which I reviewed in my 2016 post “winter is coming”, forecasted a global drop in population around the year 2030. As we are broadly tracking that model, the reader must take into consideration that by the early 2030’s, an imploding industrial world face the nightmare of pandemics, resource shortages and massive migration waves from a dying Middle East.

I am still writing my blog post on the disruptive potential of technology within the context of the Limits to Growth megatrend (climate change, resource, water, food and energy scarcity) and will aim to get that published next month.

If you enjoy the posts and wish to read them when they are published, please feel free to add your email at the bottom of the blog.

FI Update – tottering pillars

Book review of In the Shadows of the American Century by Alfred W. McCoy

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http://www.nyjournalofbooks.com

 

“Available economic, educational and technological changes indicates that, when it comes to global power, negative trends are likely to aggregate rapidly by 2020 and could reach no later then 2030. The American Century, proclaimed so triumphantly at the start of World War II, may already be battered and fading by 2025 and, except for the finger pointing, could be over by 2030”

Alfred W. McCoy

 

The acclaimed US historian Alfred W. McCoy (AWM) has written a powerful chronicle of the rise, triumph and impending fall of Pax Americana. Many of the trends covered will be familiar to those who read Forecasting Intelligence (FI) or who have come across the writings of the American writer John Michael Greer. These include the erosion of American economic power, the decay of a once vibrant American civic and democratic culture, the disastrous post-9/11 military wars in the Middle East and the vulnerabilities of a hi-tech military to asymmetrical attack by the rising powers of the East.

The central thesis of the book is that as China replaces America as the world’s largest economy, the US governing elite will increasingly rely on their residual intelligence and military capabilities to maintain their edge into the 21st century. The author considers the mighty American military vulnerable to space and cyber-attack which will deepen once Beijing covers the world with a fully operational global satellite system with quantum-based communications by 2020. China’s quantum-based satellite system is far more secure then the American reliance on compromised radio waves and will provide the Chinese with the opportunity to severely disrupt American military communications in the event of a future war.

Once this satellite system is in place in the ether, Beijing will be able to launch, in the future, space, cyber and air attacks with the goal of “blinding” the US military. This is precisely what Greer outlined in his fictional near-future novel called Twilights Last Gleaming which I reviewed here.

Whilst a military clash is a likely future trigger for the end of the American empire, AWM also discusses how accelerating climate change will devastate US coastal cities, cause mega-droughts in the south-west and mid-west and lead to mass migrations from a disintegrating central Americas by the 2040’s. The multi-trillion costs of repairing and mitigating the chaos caused will inevitably lead to a pull back from military commitments overseas.

It is interesting to note that AWM writes, in the climate change scenario, that by 2040, the chaos caused will lead to “… millions of refugees trudging out of the dry zone across North Africa and the Middle East towards a well-watered Europe”. The majority of these refugees will be Muslim and the spectre of a mega-migrations into Europe within the next few decades could trigger the end of much of Europe as we know it today. I have discussed this in my recent post Islamic Volkerwanderung.

The growing fiscal costs to be borne by climate related impacts is an additional burden on the gigantic and growing US debt burden, currently over $21 trillion and rising by the second. Escalating costs of entitlement programmes like social security and Medicare to cater to an ageing population will soar by 2030. According to current trends, social welfare costs will climb from 4% of GDP in 2010 to 18% by 2050, with pressures escalating sharply from 2020 onwards as the baby boomer generation starts retiring in their millions. Some kind of fiscal crisis is highly likely within the next decade and a retrenchment from the huge costs of maintaining the US empire abroad is inevitable.

AWM concludes by stating that by the end of 2030, the American empire will be over. What will replace it will be a post-American world of regional great powers in which China will be first amongst equals thanks to its huge economy and formidable military assets. Brasilia will dominate South America, a reduced Washington D.C. will dominate North America, Moscow – Eastern Europe, Istanbul – Middle East, Beijing – East Asia and South-East Asia and Pretoria – southern Africa.

Where I partially disagree with AWM is his views of President Trump’s “America First” domestic and foreign policy agenda. AWM is clearly an admirer of the Obama Administration and the so-called “pivot to the East” in terms of global trade and military redeployments. An entire chapter of the book is devoted to Obama’s promotion of the now rejected Trans-Pacific Trade Partnership (TPP), which would have isolated economically China within the region by developing a Pacific orientated free trade pact incorporating America’s key allies.

AWM rather blithely, in my opinion, notes that hundreds of thousands of Rust Belt workers would have lost their jobs if the TPP had been passed. The cost to America’s beleaguered industrial base would have been even worse, sharpening divisions between the Red and Blue states and weakening America’s ability to maintain industrial production in the event of a future war against China. The pro-globalisation policies of the Obama/Clinton camp would have fatally crippled America as it entered the next decade. The Trump Administration is attempting to reverse these trends, restore the once mighty industrial base where “Made in America” was a common and proud sign.

President Trump’s bravado hides a sophisticated vision of a partial withdrawal of US military personnel and bases from the imploding Greater Middle East and the free loading allies in Europe, South Korea and Japan. Right now, a staged retreat from the unsustainable business of empire and the deft handling of the rising powers, including driving a wedge between Moscow and Beijing, is the best bet in ensuring the “soft landing” the author writes off in his final chapter.

Whether President Trump can achieve this remains to be seen…

Book review of In the Shadows of the American Century by Alfred W. McCoy

Wind of change

1043442057

Sputnik international

 

“If Trump is serious and brings about the end of the late and lamentable era of globalization, the economic shockwaves will be considerable, and a great deal of wealth is going to redistribute itself.”

John Michael Greer (Ecosophia)

 

“The wind of change is blowing through this continent. Whether we like it or not, this growth of national consciousness is a political fact.”

British Prime Minister Harold Macmillan  

 

In 1960 the then British Prime Minister, Harold Macmillan, made a famous speech to the South African parliament warning of a wind of change sweeping the African continent as independence movements swept to power from the old colonial empires. It was one of those watershed moments in world history which couldn’t be stopped as the South African apartheid regime eventually realised in the 1980’s.

My view is that we are living through a similar era of massive change, driven in part by the disruptive forces of man-made climate change, worsening resource scarcity and a global debt super-cycle which nearly destroyed the financial system in 2008. The election of President Trump, something I predicted, was a critical moment in accelerating the process of collapse of the liberal international order.

This post will be a review of where we are on Brexit, the Trump presidency and global situation and where I see things going over the rest of this decade.

The Brexit vote was the first major tremor against the established political and economic status quo which so benefited the privileged classes of the developed world. Whilst the lower socio-economic classes experienced stagnating wages, driven in part by mass migration from within and outside the European Union (EU) the privileged classes benefited from higher housing prices, cheaper imported labour including nannies, plumbers and so on as a huge influx of hard working migrants drove down the costs of goods and services. The Leave vote was the moment a majority of the British population decided enough was enough.

One of the reasons the British have never had a violent revolution for the past few centuries is that it’s ruling elite have had the common sense to adapt rather than resist pressure from below. The decision by both the main parties, Labour and Conservative, to campaign to leave the single market underscores this shared recognition that being able to control immigration flows from the EU was a pressing concern for many British voters.

The Corbyn electoral surge in the May general election last year was also a rebellion against the establishment and the current way our economy is organised. For significant parts of the electorate, Jeremy Corbyn message of economic radicalism offered hope that some of the wealth accrued by the big corporations and the wealthy would be redistributed to the bottom 80% of the population. For those Brits who reside in the grim world of zero-hour contracts, Orwellian warehouses and high personal debt, capitalism holds no benefits to them. For those readers who think I am exaggerating I recommend that they read this review in the conservative Spectator magazine on how the other half live in modern Britain.

My central massage is that the Brexit and Corbyn political breakthroughs are two sides of the same coin, that is, the overwhelming desire for change in the current political and economic structure from the majority of the population. And this is happening across the developed world.

The recent elections in Italy have seen a massive surge in support for the populist parties of the Five Star Movement and the Lega gaining over half the vote. We will see if my prediction, at the beginning of the year, that the centre-right parties will be able to form a coalition government comes to pass but the scale of the anti-establishment vote shook the Italian and European political classes.

What was particularly striking was that 75% of young Italians voted for populist parties. Not surprising considering they are the “lost generation” coming to adulthood in an era of economic depression, mass unemployment and a failed euro experiment. As Ambrose Evans Pritchard notes in his article, this populist uprising will likely lead to an Italian government defying the EU on fiscal rules, banking codes, and migrant policies. Change is coming to the eurozone.

The rebellion in Italy, the rise of the nationalist AfD within Germany (which I explored last year) and the slow death of President Macron’s ambitious eurozone reform agenda all point to a softer Brexit outcome by March 2019. It is overwhelmingly in the economic self-interest of the major EU powers for an amicable divorce settlement with Great Britain. I concur with the forecast by the German investment bank Berenberg, who have predicted a “semi-soft Brexit” outcome.

What on earth is a semi-soft Brexit? To quote the bank, “the UK stays close enough to EU rules for many goods and some services to avoid a hard border in Ireland. UK remainers could support a deal that keeps the UK partly aligned with the EU while the Brexiteers could back such an agreement as it would offer the UK some room to pursue its non-EU ambitions. The UK and the EU could probably find a solution the Irish question – possibly a bespoke customs arrangement.” The recent proposals by the European parliament for a broader association agreement between the EU and the UK points to the same semi-soft outcome.

The British political class will be engrossed in the Brexit negotiations going into the end of this decade and much could happen, including a fall of the May government or early elections that could upend the current status quo. It is for this reason alone that it is too early to make a definite forecast on the likely outcome of the next general election, due by 2022.

However, assuming that an eventual semi-soft Brexit outcome is finalised by December 2020 (the end of the transition period) under the current government, it is likely that Prime Minister Theresa May will stand down shortly afterwards, to pave the way for a new leader to make their mark before returning to the country. The only Conservative politician who could transform the Tory party’s prospects is the Scottish leader Ruth Davidson who seems most in touch with the “struggling middle” who will be key to the general election. If she becomes the next female and first lesbian prime minister in a post-Brexit Britain, the Tories have a fighting chance to remain in power for a third term in office. If not, it looks more likely then not that Jeremy Corbyn’s Labour party will win the election.

I predicted at the beginning of the year that President Trump’s Republican party will remain in control of the House and Senate during the mid-term elections in November 2018. I stand by that prediction.

President Trump’s recent announcements on steel and aluminium trade tariffs has led to a howl of outrage from free traders but has been massively popular in the country. According to one poll, “about 83 percent of Americans said they supported Trump’s effort to level the playing field on foreign trade”. Trade tariffs can be a potent weapon in shielding American manufacturing from overseas imports and helping rebuild the Rust Belt industrial base across the flyover states which are key to re-election in 2020.

A recent poll published by Rasmussen illustrates the massive shift in public opinion within America on the issue of globalisation. When asked if it is “more important to keep manufacturing jobs in the United States or to keep prices low for American consumers,” a dominant 68% said it’s more important to keep manufacturing jobs in the U.S. Folks, this is a game-changer.

To put it simply, the majority of Americans support an economically nationalist tariff oriented economic strategy geared to the re-building of America’s manufacturing economy. As Greer notes in the quotation at the top of this post, if Trump goes through with his agenda, it will be the end of globalisation itself.

Whether or not the Orange Caesar carries through with his threat to impose tariffs across a range of industries, including cars, it is already causing tremors within Europe and beyond. An entire generational business model is under threat and already, German car manufacturers are panicking at the prospect of being priced out of their top two markets, the UK and America. My own view is that it is likely that an increasingly confident President Trump will impose his economic and foreign policy vision over the next two years, resulting in a likely re-election of President Trump in November 2020.

The global markets are entering the late cycle of the bull market which historically favours commodity related stocks, including oil and gold. It is for this reason I continue to think that oil will rise to 80 dollars this year which will be one facet within a rising commodity super cycle over the next couple of years.

In regards to the crypto market, it is likely that we will see continued volatility within this market over the two months before a major rise in prices from May onwards as institutional investors start to pour trillions into the new market. By the end of the year, investors will likely be kicking themselves that they didn’t take advantage of the depressed prices within the crypto sector during the early months of 2018. The emergence of the crypto-currencies and the underlying blockchain technology is a reminder of how technology is disrupting traditional industries.

I intend to carry on writing my series on technology and how it will impact the world in the coming decades and this will be the subject of my next post on FI.

I encourage all those readers who have questions to post on the comment box below or, if you have not already, subscribe to the blog.

Wind of change

Islamic Volkerwanderung

mass-migration

REUTERS

 

“We will get power, and then we will implement what is necessary…. Then we will give the directive that the three big M’s – Mohammed, Muezzin and Minaret – end at the Bosporus.”

Bjorn Hocke of Alternative fur Deutschland

“I expect mass migrations on the very large scale once climate change goes beyond certain levels, as warm periods in the past have caused extreme droughts in what’s now the Muslim Middle East. If people have a choice between migration and death, they’ll migrate — and so we’re talking about entire national populations on the move, more likely than not armed with everything the armies of their former nations had to hand.

Europe is utterly unprepared to deal with such a thing — due to many decades of blind trust in the United States for their defense, most European countries have feeble, poorly trained, poorly equipped militaries that have no experience in actual combat conditions. I see phenomena such as Daesh and Boko Haram as the first stirrings of the tsunami to come.

Will there be fighting? You bet, just as there was fighting when Islam first expanded across the Middle East, but by the time the fighting ends, I expect the borders of the EU to change in roughly the same way that the borders of the Byzantine Empire changed in the wake of the great Muslim invasions — and as usual in such situations, woe to the vanquished…”

John Michael Greer (January 2018 Open Post)

 

I would like you to read the above quote from John Greer.

And again, so that the full impact of his forecast is absorbed… especially for my European readership.

The spectre of mass migration during a period of changing climate change, droughts and a worsening scarcity in water, food and energy is not a far-fetched geopolitical fantasy but the most likely scenario facing Europe in the coming decades.

Indeed, the Guardian reported last year that “Merkel fears that long term demographic trends mean 100 million Africans could come to Europe driven by climate change, poverty and Europe is wholly unprepared”. Austrian military intelligence warned that up to 15 million African migrants could try and enter Europe by 2020. Similar leaks from secret reports prepared by other European intelligence services have been published in the media which highlight the awareness of this mega-trend within the highest European political and security circles.

During my recent review of Nafeez Ahmed book which covers the inter-connected crises threatening the global economy, e.g. climate change, resource scarcity and global debt, I referenced the potential time-frames when worsening climate change will trigger a mass flight from the Middle East and North Africa (MENA) region. This vast tropical area will become uninhabitable by 2030-2040, due to prolonged heat waves and dust storms leading to mega-migrations into the cooler European landmass.

John Greer’s grim prediction at the beginning of this year strikes me as terrifyingly plausible given what is already been discussed at the highest levels within the chancelleries of Europe. What I intend to do next is to give a potential scenario of what is likely to happen over the course of the next two decades with a focus on Europe for this particular post.

The 2015-2016 refugee crisis, which has abated somewhat last year (although reduced numbers of refugees and economic migrants have continued to flow across the Mediterranean) shows how hundreds of thousands of civilians can cross vast borders within a matter of months. It was a sneak preview into a dark future.

Imagine we are now in the year 2032. Climate change has got far worse since the dawn of the century and years of heat waves and droughts across the tropics has led to  a spiraling economic crisis, low-level famine and civil unrest on a bigger scale then the so-called Arab Spring in the early 2010’s. Arab and African governments, watching growing numbers of their citizens desperately attempt to get to Europe, arrange a secret conference where they discuss the crisis. The consensus, from the leading policymakers and guided by climate scientists, is that the region is doomed due to climate change and the only option is to leave for better climates.

A secret multi-national operation is hatched, led by the Arab League, to prepare for the invasion of the one continent that can act as a future homeland for the desperate Muslim masses of the MENA region, Europe. Over the next 18 months, governments arrange for the remaining physical capital and wealth to be shifted into relative safe havens in the Americas and East Asia, the funds of the states invested into the remaining national armies and the civilian population prepared for war. Clerics and the mosques play a key role in preparing the male youth on the coming war against the European infidels, a worthy jihad and a fight to the death in the name of the Prophet Mohammed and Allah.

Irregular Islamist pirates in the Mediterranean prepare the way, harassing the weak navies of the European Union (EU) and disrupting trade whilst the nations of Algeria, Tunisia, Egypt, Morocco, Turkey and Libya build a vast fleet of small ships ready to cross the seas. As the seas warm in the spring of 2034, the calls for jihad arise across the minarets of the Muslim world.

Whilst the civilian population are mobilised, taking their essentials, including guns, machetes, water, gold and anything else of portable value for the epic migration, the coastal towns and cities are rammed with small boats ready to cross the waters to southern Spain, Italy and Greece. The special forces and armed solders of Operation Saladin are ready to act as the advance guard of a massive population movement into the heart of Europe.

By the 2030’s, the Muslim population of Europe will be bigger then currently estimated, and will be concentrated in the major cities of western Europe. Whilst the majority of Muslim European citizens are loyal, polls suggest that a significant minority have ambivalent or negative loyalties to their host country.

It is likely, in the build-up of the armed invasion of southern Europe, that those jihadi cells will be activated to cause mass mayhem to distract European governments and their security services from the impending threat. Whether or not the jihadi terrorist plots are stopped or not, the attention of the authorities will be inwardly focused on domestic security.

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FRONTEX

 

Physical geography doesn’t change and the routes of an armed mass Muslim migration into Europe will be familiar to those who have followed the refugee crisis over the past few years. The key routes of the Muslim armada will be the following;

  • Crossing the Straits of Gibraltar into the historically Islamic lands of the fabled Al- Andalus, crushing the Rock of Gibraltar and heading towards the Pyrenees mountains, the natural barrier at the Spanish-French borders. These armies will be following the path of the legendary Abdul Rahman Al Ghafiqi in the 7th century AD.
  • The second key route will be from the city of Tunis to the horn of Italy, principally Sicily but also potentially the French island of Corsica to land in what will likely be the 2030’s to be the Muslim majority city of Marseille in France. I would imagine that isolated islands like Malta will be starved into surrender by the Muslim navies once they overwhelm the resistance of EU naval forces. Once naval superiority is achieved, a huge naval operation to transport hundreds of thousands of armed Muslim invaders into Italy would commence with the goal of conquering the capital of Rome, the citadel of the global Catholic Church and the ancient capital of the Roman Empire.
  • The final route will be through Turkey, crossing the Greek islands and heading northwards through the western Balkans into central Europe. The Greek military is a formidable force and would need to be vanquished before the Balkans route opens up for the Muslim invaders.

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DAILY MAIL

 

When one looks at the militaries of Europe, it is startling to see how few spend 2% or more of their national budget on defence. The only countries that spend the minimum NATO standard on military defence on the borderlands facing the Muslim south are Greece, with France in second place. The bulk of southern Europe can be considered military pygmies. The global rankings list for military firepower place Egypt in 10th place, Saudi Arabia in 24th and Algeria in 25th, indicating that a number of the national armies of the MENA region are not to be dismissed lightly.

A likely course of events will be that despite ferocious local resistance, the sheer scale of the invasion will see Muslim armies seize control of the bulk of Spain, the Mediterranean islands and assuming Turkey joins the war, the fall of Greece to the Islamic tsunami.

The Mediterranean will become a warzone, with naval battles and a huge armada of ships transporting initially the troops and later on the armed civilians to the landing grounds of southern Spain, Italy and mainland Greece. I suspect that the French military will be busy battling urban jihadi insurgencies in their big cities including Paris and fending off incursions by Islamic special forces into their southern coast.

Should Greece be militarily overwhelmed, the path will be clear for the millions of armed Muslims to cross through the western Balkans into Vienna. This will likely trigger the entry of the Russian Federation into the bubbling cauldron, in defence of their historic Slavic allies, the Serbs and Bulgarians. Expect to see a huge Russian army cross either by sea or land, into the western and eastern Balkans to battle the Muslim invaders coming northwards. In the process, much of central and south-eastern Europe will remerge as a de facto Russian sphere of influence.

One can therefore imagine a scenario whereby despite huge numbers, the Muslim armies become bogged down, like the Turks centuries ago, within the mountainous Balkans with the locals being financially and militarily supported by the Russian army.

Western Europe is a different matter. Whilst the United Kingdom still has a respected military, it is unlikely to become heavily involved in the fighting and will be busy securing the island defences and combating the internal jihadi threat. The most likely strong military powers in the 2030’s, France and Switzerland, will be key to the future of western Europe. The French have a large standing army, will have a young generation reared in military subscription and a shadow para-army of nationalists ready for war.

It is therefore likely that the French will crush any ethnic uprisings in their cities, with likely mass bloodshed and killings, and prevent the Muslim armies conquering southern France. The Alps will form another key defence, which will become a rallying point across central and northern Europe, with a multi-national European army joining the formidable Swiss military to keep the Muslim invaders out.

On a balance of probabilities, I think the French and Swiss defences will hold, just, with the critical assistance of the viable armies of Poland, Germany and the United Kingdom. However, it could be a close-run thing as the Muslims will literally have nothing to lose. In this climate, expect to see politicians and would-be Charles Martel warlords rise to power across Europe and those which have a long record of warning about the threat posed by Islam will likely be in a strong position to win power (including the AfD in Germany).

Should the natural defences of the Pyrenees and Alpine mountains fall to the Muslim armies, then much of central and western Europe will be exposed to the conquering armies of Islam.

Europe will become entombed in a new Islamist Dark Age.

As Greer warns in his blog, it’s entirely possible that this Shari’a dominated Europe could last centuries before being followed “…by a Reconquista on the Spanish model, with Russia and Scandinavia filling the roles of the northern provinces of Spain”.

You have been warned.

Islamic Volkerwanderung