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The US Is an Island of Stability in a Destabilizing World

Politics / GeoPolitics Oct 27, 2016 - 05:03 PM GMT

By: John_Mauldin


Yet more proof that the grass is always greener on the other side of the fence. Despite Americans’ pessimism, world-famous strategic analyst George Friedman thinks that the US is in pretty good shape while “the entire Eurasian landmass is in a state of failure.”

Eurasia is crumbling into chaos

At the Strategic Investment Conference 2016, Friedman pointed out that the US is an “island of stability.” The rest of the world is highly volatile and destabilizing. (Download a full transcript of his speech here.)

Europe, for instance, has major problems. There are great political stresses on the Union. Several Italian and Portuguese banks are failing… not to mention the ongoing destabilization in Europe, Asia, and North Africa. Friedman sees many geopolitical crises developing. If any of them spin out of control, he predicts grim consequences for the global economy.

He also points out that capital is rapidly flowing out of Europe and Asia. Money flow is increasing to the US, India, and several Latin American countries.

Russia is destabilizing

Russia is undergoing a geopolitical and economic crisis. Low oil prices have been a big blow to the Russian economy, as oil makes up 50% of their national budget. Friedman notes that the situation today is eerily similar to when the Soviet Union fell apart in the 1980s. It had tried to continue a military buildup even when oil prices dropped. Today, Russia is doing the same.

He paints a scary picture, saying, “So you have a country with 5,000 nuclear missiles destabilizing before your eyes.”

China is a dictatorship because it has no choice

“China is coming apart,” he says. Friedman thinks that China needs a dictatorship to prevent collapse. “That is the only way to hold it together.” He compares China today to Japan in 1989. He points out that in both cases, the rapid growth cycle couldn’t endure. Without a strong man at the helm, it could all come apart.

The Middle East is falling apart

In terms of the Middle East, Friedman highlights the collapse of the artificial states of Syria and Iraq. The countries never existed until diplomats drew lines on a map. Each nation contains groups that hate each other. He goes on to argue that that world is coming apart.

North America is in relatively good shape

According to Friedman, “North American countries are now the stable growth engines of the world.” He points out that Mexico is enjoying strong growth. Mexico is now the 11th largest economy in world. Friedman says Canada is a stable but slow-growing economy. It is no longer as reliant on oil as it used to be.

The US still represents 23% of global GDP. Canada and Mexico are in reasonable to good shape. The three make North America the dominant economic bloc today.

Watch an excerpt of George Friedman’s speech from SIC 2016 below:

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