YWR: The New Empire
My WhatsApp is filled with European anger about the Putin-Trump Peace talks, Trump memes, and lots of ‘expert’ analysis about the ‘multi-polar world’ we supposedly need to get used to.
Apologies if I don’t get around to reading any of it.
I see things differently. I see it the opposite.
I don’t see ‘multi-poles’. I see one-pole with the US on top.
I see a new empire emerging. Pax Americana.
Alert!!!
This is not investment advice
This is not meant to upset you.
I’m not writing this to trigger anyone. I’m writing this because there is an opportunity. Our peers don’t see what’s happening. They are listening to the same experts/views who never get anything right. These experts never predicted Trump, don’t like Trump and because of that are always on the back foot reacting. Never anticipating.
If we see things clearly and think 2 steps ahead there is money to be made.
The Table.
The US-Russia Masterstroke
China as the New Consumer
Europe + Turkey + euOS
How we make money
The Table
The Multi-polar world view is that Trump is infuriating and disrespecting many countries simultaneously, and this will backfire on the US because these countries will detach and form their own spheres of influence. Allies become enemies.
France, Germany, Mexico, Canada and everyone else are going to form a new alliance. That’s the view. Right?
Sorry. No way. Commiserate together, yes, but nothing transformational will come of it. And I’m not saying it’s right, or how things should be. I’m just saying how it is.
There are 3 power players at the table. The US, Russia and China.
And the number one strategic goal for the US is neutralising China. Neutralising China militarily.
The US-Russia Masterstroke
Trump has seen this since 2016. It was obvious back then, but he didn’t have the power to do it in his first term. Now he does and he has rewired the entire US security apparatus for it.
The way you chop the legs out from China is by making friends with Russia.
The Russia-China ‘friendship’ was never a good fit and Trump sees this. China’s strategic weakness is they are resource and energy poor. While Russia is full of energy and resources yet has a 4,000km uninhabited border with China. This is a vulnerability. Xi is a wolf and Putin knows it.
Also, by attaching itself to China Russia becomes weaker by the day. Its economy gets overrun by Chinese goods, while China gets stronger. Eventually, Russia becomes China’s vassal, like Kazakhstan.
Culturally, it’s not a fit either. Russians are European, not Chinese.
What brings Xi and Putin together is that they are both dictators shunned by Europe and the US.
But Americans are increasingly asking the question ‘Why do we still hate Russia?’ It’s what Trump was asking in 2016.
We won the Cold War with Russia. It’s over. They lost. There is nothing to fear. Russia is a paper tiger, something from Rocky IV and the 80’s. Look at the Ukraine war. Three years and all they won is the Donbas? It’s an embarrassment. And it’s why the US isn’t worried about Russia attacking Europe. If Russia can’t beat the Ukraine, which doesn’t even have an airforce, then it’s not a threat to anyone.
Instead it’s an opportunity.
What does Putin want? He said it over and over in the Tucker Carlson interview. He wants respect and he wants acceptance by the US and Europe without the CIA and NATO constantly trying to undermine him. And he needs a way out of the Ukraine War.
So make him a deal. Bring him into the empire. Make him an ally.
Invite Putin back to all the big G20 meetings, bring Russia back into the financial system, and drop the sanctions. Yes, the Europeans will go crazy, for awhile, but at the end of the day there is nothing they can do about it. Eventually they will get over it.
In return you get a quasi-military ally and you split Russia away from China. And that is the real win. Because without Russia as a military partner, or a Russia whose allegiance is conflicted and questionable, it’s checkmate for China.
Side benefit. It’s checkmate for Iran too.
That’s the real game. Not the Ukraine.
What adds credibility to the deal for Russia is that JD Vance is incredibly popular and will be the next president. For Russia you have policy certainty for 8 years, probably 12. And that’s enough to work with.
China as the New Consumer
When one door closes another opens. Isn’t that what they say?
For China the military superpower door is closing. For now at least. A Russia partnered with the US means China is surrounded on all sides. Yes, still a fantastic military and no-one would ever try and attack China, but China is in a weak position to try and project force.
But the door is wide open to continue to grow as a commercial super-power. And I think they are realising this. Tone down the military rhetoric, and stop harassing the poor Filipinos. Be more like Japan, be more likeable, and the world is your oyster.
On January 20th, Trump’s inauguration date, China unexpectedly had its best PR day ever. A team of Chinese scientists nobody had ever heard of released a ground breaking AI model which upended all of Silicon Valley. Without the latest Nvidia chips, without hundreds of billions of $’s of VC funding, a small team of innovators from Hangzhou figured out how to make a better AI model at 1/50th of the cost. It was a fairy tale story.
China was already bumbling its way towards this realisation, but the DeepSeek success was a massive reinforcement. The way to win going forward is to support the tech ecosystem, support the entrepreneurs and support the stock market. The big successes will come from the start ups you’ve never heard of, not the bureaucratic, lumbering, corrupt SOE’s.
Which is why 3 weeks later you had this carefully scripted moment.
China stepping up to grow its consumer economy and capital markets syncs naturally with the US life cycle. It’s a fit. It’s time to pass the baton. The US in the years ahead needs to devalue the dollar and inflate its way out of its debt. The US also wants to shift away from being the consumer of last resort. It wants to be more balanced with a greater share of manufacturing. China for its part is too big and has outgrown an export driven growth strategy. China needs to rebalance towards more of a consumer economy, or ‘dual circulation’ as Xi calls it. Both sides need this change.
I’m not talking about a complete change, but a shift where the trade surpluses start to shrink and China becomes the new force for consumption.
Europe + Turkey + euOS
Now more than ever Europe realises it needs to find common direction and it needs to grow. The Draghi paper was already calling for this (A Secret to Making Money).
It’s one thing to want to grow, and have more influence. But how do you do it?
Maybe Europe doesn’t have to change. Maybe the answer is right in front on them.
If you drive East across Europe from Spain on the one side, through the South of France, across Italy to Trieste and into Croatia it’s kind of amazing. You realise how big Europe is and how all these countries with different cultures and languages, which were fighting back and forth for hundreds of years are now part of a peaceful trading union with a common currency. You drive from one country to the next and at the border they all have that blue flag with the yellow stars.
For smaller countries like Croatia it’s kind of a good deal. You get to keep your own country, but be part of a bigger more stable financial system. Rather than call it a political union maybe think of the EU is an operating system. A bunch of different countries, all interacting with a common currency and legal rules. Like Windows or iOS for countries. Yes, nobody agrees on everything, but maybe that’s a positive. A feature. Not a bug.
But why does it have to be confined to Europe? Why not grow it? Think of all the small countries, with crappy, hyper inflating currencies who would love to be part of the EU. Look at Greece. Basket-case PIG to success story.
So here’s my pitch. Grow the euOS and start by talking to Turkey. Turkey is a fit in a way it never was before. You want a military, Turkey has it. You want to open up new markets and grow the economy? Well, you might not have been paying attention, but Turkey has been building tremendous influence across the Middle East and Africa. Turkey brings a lot to the table and they need a partner too. If you are worried about immigration, let Turkey be part of the EU, use the Euro (which they need), but not be part of Schengen.
Turkey is the test case. If it works, bring in Morocco. Maybe also West Africa, which is already pegged to the Euro. Grow the network, grow the Euro, reap the network effects.