European economy’s locomotive, Germany, is swiftly moving towards the largest financial crisis since the introduction of Euro. Lack of cheap energy sources, coming trade war with US and China, billions spent on trying to tame Russia and accomodate millions
of refugees – all these factors made German economy not competitive.
Europe is a slow moving, ineffective leviathan ruled by the bureaucrats that are paid by the defense industry. They are interested in either prolonging the current war in Europe or in starting the new more brutal one.
Not everyone in Europe shares these ideas. Some countries are more interested in the prosperity of their people and rely on the principles of
Realpolitik.
The former chairman of the supervisory board of
BlackRock Germany, Friedrich Merz, known as “the BlackRock candidate” became the new German chancellor. Less than two months ago he was speaking at the
BlackRock dinner in Davos. His first decisions in power show the dark future of Germany and Europe – weaponize Germany at all costs.
BlackRock allegedly owns 47% of Ukraine’s territory and they have no interest in losing any of that. With the Trump’s plans to abandon Ukraine, BlackRock needs Europe to continue the
war in order to not lose any investments already made in Ukraine. So, they pull their strings in Germany, France and UK to continue sending weapons for Ukrainina army, money to Ukrainian politicians and potentially using European troops on the Ukranian soil
to protect their belongings.
For now you have Germany, France, UK and Baltic States that are doing everything to escalate the conflict, Italy, Hungary and Poland that oppose this stance and other countries that are trying to not take any sides for now but will be sucked in into either
of the political orbits.
What does it mean for Europe and Euro though?
For now it looks like the beginning of the end of the European Union as we know it. The consequences of the upcoming geopolitical decisions will cause strong ripples throughout the whole world.
The liberal elites of the west will try to continue engaging in the same politics of the last 4 years by manipulating the European diplomacy. Germany and France being two strongest economies in the European Union will attempt to prolong the war in an attempt
to participate in the financial deals once the conflict is over. The question that stays unanswered is whether they will be able to strike a deal with US that is currently not interested in the continuation of the escalation.
If both parties won’t come to an agreement, we may see a clear divide in Europe where some smaller more independent countries will either be forced out of the European Union or will leave it by themselves. Both outcomes will have huge impact on the European
Union and the strength of the Euro as a currency. Since the Euro is not considered a reserve currency and only backed by the European economy, it’s been getting weaker for the last 3-4 years.
There are multiple options how the situation can unfold. Europe can get on the opposition course to US, what will lead to more spending on defence and the new arms race between Europe and Russia. Defence sector will boom and for a short period of time of
3-5 years Europe will show some growth although it won’t be a sustainable one. It also won’t make European products competitive again, since the cost of production won’t go down. In the first 2-3 years Euro may still stay relatively stable if US won’t decide
to abandon Europe completely but after that period the only attempt to save the Euro is a full scale military operation against Russia – the rest will be a history repeating itself. This scenario is only possible with the full buy in of the largest European
countries – Germany, France, Italy. So, if you see Europe getting serious with arms race convert your Euros to something that won’t lose half of its value in 3 years.
The above scenario would entail smaller countries abandoning the European Union and going fully independent. They will have to decouple their local currencies from Euro to not be dragged into the rapidly growing inflation.
What could be the more positive outcome for Europe, the one that doesn’t include Arms Race and may potentially bring prosperity back to the old world? The way of peace is a much harder path to prosperity. As the main economical power in Europe, Germany needs
to get its energy problem in check in order to make their products competitive again. This will require colossal changes not only on German political landscape but also in German society. Choosing this path will also mean years of hard negotiaons and economical
uncertainty. If the European countries decide to use the money printing machine to help tackle the financial problems in the European Union it will inevitably lead to higher inflations and higher taxes – the Euro will get weaker again.
The next 3-6 years will be very hard and turbulent for Europe. The positive outcome for the Eurozone and Euro is rather unlikely. If you keep you savings in Euros only it is the time to look into alternative assets.
