Thing are moving even faster than I anticipated!

So, some kind of embryonic deal has already been agreed, it seems, between Russia and America given the speed of the planned summit to be held between President Putin and President Trump in Saudi Arabia (as soon as the end of the month).

The bigger macro picture is the Americans are getting out of the global empire business and shifting back to their North American continental core. I saw this tweet today on X saying the following “The U.S. will likely announce a massive withdrawal of American soldiers from Europe.” Christoph Heusgen, former German ambassador to the UN, head of the MSC. Said before the MSC but tells us a lot nonetheless.”

This is a game-changing moment of historical proportions. The US Defence Secretary Peter Hegsworth on 12th February declared that the US is no longer focused on European security; effectively declaring the end of NATO.

Folks, the long European break from history is over. Welcome back Europe.

This post captures the macro geopolitical shift the best, “At this juncture, the U.S. would “take its geopolitical football and go home,” retreating inward to fortify a continental empire, securing North America and extending influence deeper into Central America”.

The future of American power can be captured in this map.

Without American muscle, Europe is largely defenceless in its capacity to defend itself.

Even the United Kingdom, one of the more more robust militaries of Europe, is in a dire state as per this article.

“It is impossible to exaggerate the importance of this situation. As matters stand, most of the Royal Navy’s attack submarines are unable to undertake operations; the Royal Marines are reliant on one landing ship with inadequate command and control capabilities; and the Army’s principal combat formation, 3rd (UK) Division, would struggle to generate even a brigade-strength deployment. The new Ajax armoured fighting vehicle will not reach full operational capability until 2028, eight years behind schedule, with its wheeled Boxer counterpart reaching that milestone in 2032.”

Longer term, demographics and Europe’s near abroad suggest a dangerous security environment for much of Europe. A rising proportion of the population is Muslim and many of those younger Muslims are Islamist in their outlook, which poll and after poll shows. By mid-century, it is quite conceivable that our biggest cities in Europe will be majority Muslim for the under 30s. Sharia parties will be kingmakers in big cities, and possibly even national level politics.

At the same time, the long-term penetration of jihadi and Islamist ideologies by the Muslim Brotherhood (MB) grows, year by year, sponsored and supported by Turkey and Qatar. In fact, it seems that we are already seeing a stealth alliance between Turkey, Qatar, the MB and Al-Qaeda, a new Sunni radical axis, that seeks to overthrow Egypt, Jordan and eventually invade Europe. As John Greer recently wrote on his blog, it wouldn’t surprise him to see Turkish armies at the gates of Vienna at some point in the future this century.

War is returning to Europe and it isn’t just the revanchist Russians to worry about. If Islamist forces manage to gain control of Egypt’s formidable conventional military, combined with allied countries across the Arab world (and beyond) Europe will be at risk. This is unlikely to happen anytime soon, but at some in the decades to come, its a plausible scenario.

The world is seeing the Americans withdrawing, and ramifications will be huge in the Middle East and East Asia as much as Europe in the years to come. Everything is shifting.

Welcome to history folks. The holiday was fun but its now over.

Not a huge amount to update since my last quick takes session.

One blog I strongly recommend you bookmark is this one here, his writing is consistently excellent. His latest piece goes into detail on why 2030 is looking to be a car crash for the advanced world’s economy as overall energy production peaks and the cost to produce energy soars from 2030 onwards.

This very much aligns with my wider outlook of a Greater Depression commencing at some point in the 2nd half of this decade (although I think it will only become truly apparent to all around 2030). I have written plenty before on this blog on what to prepare for in anticipation of what is coming (something we have known since the 1970s and the Limits to Growth report came out).

To keep it simple, get out of debt, live a modest lifestyle, learn useful skills, diversify your income streams and build up supplies of non-perishable stuff that you find useful when globalised supply chains still function. Learn to grow some food, don’t rely too much of unsustainable systems and think about where you want to live long term.

As for the US elections, the overall impression is that since that debate performance, Trump has effectively wiped out the narrow but real lead in the Electoral College vote and the election is basically a pure tie right now. I’m starting to see the signs though that memories of the debate is starting to fade a bit and the fundamentals are starting to re-assert themselves again. So, just maybe, Trump is starting to inch out ahead of Harris again in a few key states.

My overall impression is Trump is ahead in Georgia, North Carolina and Pennsylvania and therefore would narrowly win the election if it was held today. However, this is a very tight race and overall I would call it a tie right now. The next few weeks are critical but Trump seems to have avoided any stupid gaffes since his poor debate performance and that seems to be helping him to edge up again.

There is growing chatter about a potential Chinese invasion/attack on Taiwan around 2027 and the risks of a world war and a economic crisis. We will see. I’m not wholly convinced but its certainly a real possibility. I would like to think that despite all the sabre rattling we can dodge a major war this decade even if we get hot wars in the margins like in the Middle East right now.

As for that other war in eastern Europe, Russia is making incremental progress in taking the whole of the Donbass as the Ukrainian army falls apart. Nothing has changed in my base case that 2024 will see the Donbas fall to Russia, 2025 larger part of Ukraine including possibly Kiev and Odessa and, should the war still be on, 2026 the bulk of the remaining country collapsing.

Most likely, at some point in 2025, there will be a ceasefire and a deal between the Russians and whoever replaces Zelensky. What happens after that is a fascinating question. Most likely, a strange period where the new realities everyone adjusts to as Europe wakes up to the fact Russia is the dominant military power. Will the Americans hang around or leave Europe to its fate? That’s a hard call and depends on who wins the elections.

That’s it for this time. Enjoy the peace!

Hi all,

Apologies for the long delay in posting, its been very busy the last few months.

Here are a few of my thoughts in terms of what has happened recently:

US elections: the forced removal of President Biden as the Democratic candidate after his disastrous debate performance and replacement with Vice President Harris has transformed the race. Harris has now caught up with Trump in the critical swing states and the respected Nate Silver pollster has called it a tied race now.

Based on fundamentals, e.g. the top two issues that voters care about, the economy and immigration, Trump should still narrowly win this election. However, Harris has clearly energised parts of the Democratic base, in particular Blacks, young voters and women.

If you put a gun to my head, I would say either candidate can win but Trump should edge in the electoral college in November, after the honeymoon phase ends for Harris in the coming months. Do I have a strong conviction about this? No, so there you go.

US economy: markets are now getting concerned about prospects for economic growth in the US. My take is earnings reports all show that US consumers are cutting back on discretionary spending e.g. nice to haves and that is a trend that will continue in the years and decades ahead. This is a global trend which is why anyone invested or involved in businesses that gear to nice to haves versus necessities should reconsider their jobs/careers.

At a global level, my best estimate is nominal growth will die in 2026/27 and the world will tip into economic contraction (in nominal not just in real terms) in the late 2020s, triggering a massive collapse in global assets at the end of this decade.

Europe: Russia continues to make incremental gains in the east of the country and I see no reason to change my outlook that Russia will fully gain the Donbas this year, will make further gains into Kiev and Odessa in 2025 and a collapse of Ukraine will happen in 2026 unless a peace deal emerges next year.

Either way, a Russian victory in this war will transform the post-Soviet security architecture in Europe and galvanise those wanting to end the American dominance of the world. So, either way, I expect the half of the 2020s to be a dangerous time geopolitically not just in Europe but in East Asia, Middle East and the Caucasus.

So, my longer term outlook remains the same for Europe, wars are coming (concentrated in the Balkans and eastern Europe but likely to spread over time) and, in a generations time, once demographic trends continue, rising tensions between the Muslim minority (who will be majorities in a few European cities by the 2040s – e.g. Birmingham etc) and the non-Muslim populations.

What will make this growing cleavage particularly dangerous is the fact that climate change is making much of north Africa and the Middle East increasingly hard to live in for large scale populations. Its a matter of time, probably within a decade or so, before populations in those regions conclude they have to move to more hospitable climates and Europe is the obvious choice.

Based on my reading of the data, the 2040s and 2050s look like the period when large scale invasions from Africa and the Middle East will start in earnest, around the time that demographic trends lead to a large plurality, and in some cities, majorities, of young men being Muslim. You don’t need to be a historian to work out what happens next, civil wars and external invasions that transform much of Europe into an Islamic empire.

Or as Greer recently said, “As for barbarian invasions, nah, this is just the warmup exercises for that. I recommend reading a good account of the barbarian invasion of Gaul in 406-407 if you want a sense of what’s on its way: that is to say, not a modest flow of refugees, but massed armies and the overthrow of governments. You’ll know the next round is well under way when the last president of France is hiding out in Canada and the Islamic Republic of al-Faransa has just been proclaimed in Paris.”

On that positive note enjoy the weekend!

Adobe

Apologies for the delay in posting, been a bit busy the last few months!

So, what has fundamentally changed since my last series of posts early this year and late last year? Well, for one thing it looks highly likely we are facing a re-run of the Biden versus Trump contest in November 2024 (assuming neither candidate is incapacitated or dies between now and then).

If one looks at the swing state polling, there is a clear and consistent trend that Trump is narrowly ahead in the majority of the states and this has been the case for months now. There is a plausible path for President Biden to win, through Michigan, Minnesota and Pennsylvania (which assumes he loses the rest of the swing states like Arizona, Georgia, Nevada etc).

Here is the map for the US electoral college geeks among you.

My own personal view remains, albeit with a low conviction ratio, that Trump is more likely than not to win this election but very narrowly. I wouldn’t be shocked or surprised if the above turns out to be the result on election day though.

Biden’s best pathway is through the mainly white Rust Belt states in the northeast given his declining numbers among non-white minorities that are trending towards the Republicans.

At a bigger scale, all the metrics do seem to suggest we are tracking the LTG BAU modelling on a macro scale. I discovered a very interesting article recently called Peak Everything which attempts to track what is likely to be an economic depression coming.

Here is one of their graphs, one I find most interesting:

It tries to capture the trajectory of the global economy as we face declining energy inputs and rising energy requirements to maintain energy supplies going forward.

What is clearly obvious is that 1) more and more economic activity will be essentials in nature and investment and discretionaries (e.g. nice to haves) will shrink from around now into 2040 and 2) at sometime around the mid 2020s, again around now, global prosperity will shift into contraction rather than growth (it appears to become clear around 2026/27 when we tip into economic contraction), until then we are basically stagnating (with certain bits of the globe still growing for a few more years).

This also aligns with various sources I track in terms of the S&P 500 that suggest we are looking at a peak in the US equity index around 2026 at 6k or above. Whether it crashes after that, corrects and goes sideways until the late 2020s remains to be seen. Certainly looking at those charts its hard not to conclude a major financial and equities crash is looming, certainly past 2028 or so.

My personal strategy is to take profits over 2025/2026 in my equities, hold cash and be patient and wait for the inevitable crash in the markets to buy high quality dividend earning companies geared to the “essentials” economy. I’m thinking mining, energy, fertiliser, agricultural and consumer durables. After all, we will still consume energy, use copper, eat and produce food and require tractors, toothpaste and baby wipers in 20 years (even if we can’t afford fancy smartphones, new cars, foreign holidays, new clothes, expensive aftershave and the latest tech gadgets etc).

That is what the blog, which I do recommend reading in full, here, covers in depth.

Population trends, specifically the looming peak in global population is also beautifully captured by one of John Greer’s recent essays, here. To cut a long story short, with a contracting population you will see a contracting economy. There will be little point investing (outside niche areas), businesses will struggle to make a profit and anyone who owns assets should expect the mean to go lower as less and less people are around to use or consume anything.

Peter Zeihan has also discussed the dire implications of this for our current system in depth as well. The long and short of it is welfare systems, and pension systems in particular, are unlikely to survive these shocks. What is likely to happen is a political crisis, triggered by a fiscal/debt crisis triggered in term by the end of growth and various attempts to try and stabilise the system. This will be a mix of rampant money printing, cutting of benefits to working age people and in the worst case scenario a collapse of governments.

The key point to remember is to rely less on governments and corporations going forward. DIY is the future as Greer writes well in his latest post online. One example of rising costs is insurance, something Ian Welsh has commented on his recent post here, as availability is already starting to shrink for those places most exposed to fires and hurricanes.

“As government fails, we will be pushed back on what we can do for ourselves, and for that to work we’ll have to be realistic: “what can our group actually do?” Can we source medicines? Can we rebuild?“. This is our future, we will have to become more self-reliant, whether we like it or not.

So my macro outlook remains the same, these forces are building up like a earthquake, the signals are already flashing red, and are likely to explode in the late 2020s/early 2030s in a systemic political, financial and energetic crisis.

I haven’t discussed this before, but I have maintained a private “model” of where the Ukraine war is heading for a while now. We are tracking a WW2 model, with 2022 being Russia’s 1941 (a disaster), 2023 being 1942 (not good but Stalingrad proving a turning point), with 2024 being 1943 when Russia made major progress in winning the war and gaining territory, and 2025/26 being the collapse of Ukraine and surrender.

The loss of Bakhmut to the Russians in 2023 is equivalent to Stalingrad and the more recent loss of the fortress of Avdiivek could potentially be similar to the Battle of Kiev in 1943, after which the Germans lost their strategic offensive capacity. What this suggests is a collapse of the Ukrainian lines at some point between this year and 2026, or at least starting this Summer when the Russians are likely to launch their massive offensive.

The defeat of Ukraine would not just be a disaster for Ukrainians but also a humiliation for NATO and the Western powers. It will cause huge tensions within the EU and likely accelerate the withdrawal of the Americans back to their continental heartland.

To summarise, we are still in the early stages of a collapse of the current globalised geopolitical and economic order and whatever replaces it will be regional and local in nature as globalised supply chains unravel in the coming decades.

Our world will become smaller, more frugal and closer to what our parents and grandparents lived. Its not the end of the world but the expectations gap between the future we were promised and what we are likely to get is huge, particularly in the developed world.

Best to buy the popcorn and enjoy the ride folks.