Brad Cabana: Stratfor is Wrong. BRICS’ Market Beats the West 3.1 to 1.1 Billion

If pole shift theory peddlers wants us to wait for a dozen or hundreds of centuries to get the ultimate confirmation of their musings, Brad Cabana, a Canadian political scientist, tells us to wait just for a few years and witness a no less monumental global economic shift.


Image source: IPS

In what seems to be a very down-to-earth argument, Cabana demolishes a recent “analytical” attempt of confirming the bright future of US world dominance for the decades to come. Stratfor, a well known CIA-related “private” intelligence business and a popular source of selectively informative editorials on security issues, asserted that instability in the main non-US contenders for “global preponderance” dooms the expected global shift.

It is not our aim to play the referee in this exchange. However, let us point out, that Mr. Cabana may think twice before dismissing Stratfor’s “democratic” instability forecast. Given Stratfor’s connections, one could wonder how much of this forecast is gleaned from analysis or from actual knowledge of events to come. Boris Nemtsov’s recent murder is just another example of how easy it could be for chaos to be injected in an extremely low-cost, targeted manner into any system.

Still, Mr. Cabana has a strong argument to make. A virtually bankrupt alliance faces one ready to grow. And one of them is outnumbered three to one. Here is Brad Cabana’s take:

…First, and probably most important, Stratfor’s conclusions are based on the current system of world commerce and consumption. It brags that the US still produces 22% of the world’s economic activity. That may be true, but it misses the key point – all that is about to change. Brazil, Russia, India, China (BRIC countires) are establishing a singular trading bloc among themselves. Importantly, the bloc’s transactions are to conducted in respective national currencies – not pegged to the US dollar or even using the US dollar. In effect, they are recreating the world economy to the exclusion of the US and major European powers.

But what does the new bloc have that will unseat US dominance? One word: markets. With the creation of the new bloc, the US and Europe will lose significant markets for their businesses. The loss of those markets cannot be replaced. The US and Europe will be faced with massive deflation in their economies as a result, large scale recession if not depression, and the very social unrest Stratfor predicts for China and Russia will instead be taking place in the US and Europe.

Here are some real numbers that tell the tale. By 2025 the populations (markets) of the new bloc will be approximately 3.1 billion. By contrast, the North American/European bloc will have a population of 1.1 billion. That is if the current western trade partnerships remain intact in the face of closed markets in the new bloc.

Here are some even more staggering numbers. In a word: debt. The ability to borrow to consume. The necessary requirement to grow and drive any economy. You can check the current numbers of all countries here. There are two sets of shocking numbers – gross government debt as a percentage of GDP (Gross Domestic Product – annual) and debt per person. Read all about it on Brad Cabana’s Blog

The lesson here is twofold. Firstly, the debt per person and overall gross sovereign debt of the powering nations behind the new bloc are minuscule, and they are ripe for growth. Secondly, in the case of India, its large gross debt as a percentage of GDP, yet minute personal debt, means once it economy is properly stimulated its Debt vs GDP ratio will fall drastically. None of these things can be said for the Western bloc. In a phrase: the West is maxed out. It has nowhere to grow, and certainly no ability to dominate the new bloc politically, militarily, or economically. Stratfor is just plain wrong. Very wrong. Surprisingly wrong. Money and markets do not have a soul. It has no national agenda or pride. It only exists on numbers. Those numbers heavily weigh to the favour of the new BRIC alliance. Just as assuredly, they condemn the West to a time of severe and fast decline.

Read Brad Cabana’s full story and more on his Blog Rock Solid Politics


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Categories: latest, United States