YWR: The New Empire Pt 2.
Update to The New Empire.
Putin and Trump are meeting in Anchorage next Friday, August 15th.
This is historic. And so much symbolism to this meeting being in Anchorage.
It’s not DC.
You are welcome in the US. Don’t worry about the ICC arrest warrants.
Let’s rethink our relationship. If we look at the world from an Alaskan perspective we’re neighbours. Just 55 miles apart.
Alaska used to be owned by Russia. A nod to Russia’s great past?
Anchorage is new ground. A new setting for a new relationship.
Recap of New Empire
In New Empire we refuted the idea of the multi-polar world and the consensus interpretation that the chaos we see currently is the result of US weakness and a vacuum of power.
Yes, there may be territorial squabbles going on, and the US seems like it’s not getting involved, but it’s because there is a new game. And it’s getting played at a higher level.
We are seeing the transition of the US from a Republic to an Empire.
The Russia pivot is the master stroke. It changes the entire chessboard.
Trump and those around him see the upside.
Russia’s point of view.
Being isolated from the world and dependent on Chinese manufactured goods while the whole world accelerates ahead with AI is not a winning long-term position for Russia. The Russia-China alliance is an uneasy relationship of necessity. Two people stuck in a box who need to make friends because they have nobody else. Putin knows their China dependence is a weakness chipping away at Russia. It ends with Russia a Chinese vassal. They see this playing out with Kazakhstan.
But why does Russia have to be an outcast who’s only businesses selling sanctioned oil to China? Russia’s great scientists and mathematicians should be launching unicorn AI start-ups. Russia could be a global hub for gas fired data centers. They are capable of much more.
And culturally Russia is more Western than Chinese.
On the other hand re-engaging with the current Europe is a non-starter for Russia.
But Trump is a way out. Someone who understands their point of view on how we got to where we are. A chance for a complete reset in a new world order.
Trump’s point of view.
Why do we have to be enemies? We actually have a lot in common. And yes, Russia has missiles, but the Ukraine War exposed that actually Russia is quite weak. It’s a big embarrassment that after 3 years the Russian Army is still trying to conquer the Donbas against a Ukrainian Army with limited weaponry. Poland and Finland have nothing to worry about.
So if Russia isn’t a threat can it be an opportunity?
Offer a way out for Putin. Offer a deal. Bring him out of the cold and make him part of the New Empire.
Because once Russia and the US are working on areas of cooperation, like in the Artic for example, the whole China-Russia-Iran-North Korea alliance unravels.
By building a relationship with the US Russia strengthens its hand against China. A Russia dating the US changes the power dynamics. Now nobody can trust each other. China can’t trust Russia and neither can Iran. In game theory this is the Prisoner’s Dilemma. It becomes every country for themselves.
Like with the trade deals get in line to meet with Trump and cut your deal. And he who moves first gets the best terms (Vietnam with Trade and Russia with geopolitics).
So Russia is pivoting to the US and the New Empire.
And this is putting China’s CCP under tremendous stress. A Russia-US partnership? The ground is moving under their feet. China is struggling to adapt to this reality. It’s why there are so many rumours swirling whether the leadership of the CCP is about to change. Either Xi Jinping makes the New Empire pivot himself, or someone new will be put in place to make the change.
Russia is check. China will be checkmate.
The Dawn of The New Empire.
Why this time is different
In Global Entropy: Enter the Dragons
did fantastic work on how forcing Western Values on the rest of the world created the opening for Russia and China to gain allies and build influence.Marvin’s point is that we think our culture and values are universal, but when you actually survey people globally, as Inglehart and Welzel did in their World Values Survey (WVS), you find Europe is an outlier. The US, while closer to a more universally accepted culture, is still quite different from the cultures of Africa, Latin America, Confucian Asia and South Asia.
So while the World Bank would tie emerging market project financing to the implementation of ESG, China with its Belt and Road strategy was willing to provide financing and build key infrastructure with no strings attached. China and Russia would work with any country without imposing their values and this is how they gained so much influence.
And this is the key difference with Trump. And also why he is so controversial.
He changes that.
Trump is willing to work with the Ayatollah Khomeini.
Trump will work with Kim Jung Un.
Trump will work with Putin.
In the New Empire you can be a dictator and there doesn’t have to be regime change, as long as you bend a knee, do deals, open your markets to the US, and don’t challenge US military supremacy. You can be a regional power. Fine. But there is only 1 King.
In return the US is fine with you running your country how you want, within reason. You don’t have to do ESG and you don’t have to be a democracy, although it would be better for you if you are.
It’s actually a bit Chinese.
And this is why the New Empire is unfolding and why the US is gaining power, not losing it.
Oh, and then throw in how the entire New Empire Blockchain is going to run on US$ stablecoins.
Brilliant.
How we Make Money
The New Empire is fantastic for the US, but the delta, where the bigger money will be made, might be in the emerging markets. Areas of the world where investors never felt comfortable investing becoming part of the New Empire.
China is the big one. No one feels comfortable with China. But over the next 2 years if we see the China pivot, which we already see happening with their decision to not get into a trade war with the US, we could see a much greater allocation to the Chinese equities from 0% currently.
Also look for the upcoming leadership changes. The world will swing right. Italy made the move. Reform will lead the UK and Le Pen will lead France. Columbia is another. There will be Argentina trades all over the place. Brazil is a biggie.
Imagine a Middle East where Iran stops burning American flags, accepts its place in the world, and decides it wants to be like Dubai too. And MBS in Saudi is ready to engage with Iran and help make this happen. UAE-Saudi-Iran all with Vision 2040 plans? The Middle East goes to 11 on the boom scale. And I mean an economic boom.
And what if North Korea decides it wants to open up too? Does that make us even more bullish on Korea? Korea goes to an 11 too.
There are opportunities unfolding everywhere!
Erik
Just stop trying to provide intellectual backbone to the Trump administration and mission. There is no grand plan. Just geopolitical vandalism and grift. It is utterly revolting and I miss the old US that I grew up admiring.
Trump motivations aside, this assumes Putin ultimately will settle for getting more respect from the rest of the world via some sort of deal with the US, however far fetched. However, if Putin is motivated by his desire to make Russia a great power, and is still haunted by the Soviet breakup, then he won’t be able to stop his imperialistic urges and need to look strong at all times. If this is the case it’s only a matter of time before a deal blows up. Also, what you describe sounds a lot like the US pre-invasion relationship with Russia. Even then, the corruption and cronyism in Russia hindered its ability to be an innovative and diversified economy. So what’s holding Russia back isn’t that it is a global pariah, but because it’s run by a dictator who only cares about looking strong and enriching himself and his pals.