"Events are not unfolding as expected and predicted almost everywhere else. Instead, they keep unfolding virtually without fail precisely as forecast here at Global Events Magazine online. The conventional wisdom of the mainstream isn't working - it keeps having to be rewritten, after the fact, to match what is presented here before it happens."

"The widely "unexpected" shape the world order is now taking on has been predicted in illuminating detail right here for over three years. In the pages of this Magazine ... I have presented the persuasive and compelling proof to back up my forecasts. That complete portfolio of forecasts and all their supporting evidence is still available here for anyone who wishes to examine it. In the world at large, the vast bulk of experts, analysts and observers won't figure out what's actually happening and what the meaning of events is until after it's over. Here, you get the reliable and accurate forecast and the insightful analysis before it happens - this Magazine prepares you for what's coming so that when it invariably arrives you aren't caught on your heels."

Letter from the Editor - March 9, 2007

Deteriorating East-West Relations

East-West relations are pointedly deteriorating as the world rapidly polarizes across the dividing line issue of whether US-led unipolarity should be supported or thwarted.

Intimately intertwined with, and wholly inseparable from, that issue is the issue of who will administer access to, and sit in de facto control over, strategic global resources - will it be the US "hyper-power" and the West, or will it be Russia and the East?

The equatorial dividing line constituted by the tight braid of those two issues, a dividing line polarizing the increasingly conspicuous geopolitical hemispheres of our world order, is becoming ever more sharply defined all along the geopolitical "seam" between East and West as their fundamental interests increasingly clash.

This widely "unexpected" shape the world order is now taking on has been predicted in illuminating detail right here for over three years.

Here, you get the reliable and accurate forecast and the insightful analysis before it happens - this Magazine prepares you for what's coming so that when it invariably arrives you aren't caught on your heels.

Rapidly Deteriorating East-West Relations and Global Re-Polarization

East-West relations are pointedly deteriorating as the world rapidly polarizes across the dividing line issue of whether US-led unipolarity should be supported or thwarted. Intimately intertwined with, and wholly inseparable from, that issue is the issue of who will administer access to, and sit in de facto control over, strategic global resources - will it be the US "hyper-power" and the West, or will it be Russia and the East?

The equatorial dividing line constituted by the tight braid of those two issues, a dividing line polarizing the increasingly conspicuous geopolitical hemispheres of our world order, is becoming ever more sharply defined all along the geopolitical "seam" between East and West as their fundamental interests increasingly clash.

For example, the controversial US missile defense plans for Europe and the Caucasus have been seen by Russia as confrontational and as yet another attempt by the US to encircle Russia and extend the reach of destabilizing US-led unipolarity. Mr. Putin's icy speech in Munich on Feb. 10 set the stage for Moscow's assertive response and for a pointed deterioration in US-Russia relations. Russia has since threatened to withdraw from important arms pacts, establish a new array of ballistic missiles targeting Poland and the Czech Republic, and use its strategic bombers to attack and destroy the anti-missile installations once they become operational.

Russia is embarking on a potent but carefully gauged arms build-up, deepening its military cooperation with its global partners, and pointedly sounding the global alarm with respect to the dangers and undesirability of continued US-led unipolarity. The Russian message is powerfully resonating in minds and hearts across the globe among those in the East and aligned with the East who disdain unipolarity. "Old" Europe is no exception here, and has called upon the US to get a NATO green light and a Russian acquiescence before proceeding with its missile defense plans. The US has refused to do so. Consequently, ongoing polarization over the dividing line issues noted here is driving an ever deeper wedge between the US and its traditional "Old" European allies, who are increasingly beholden to, and sympathetic with, the rising East.

On the issue of Iran, the emerging story of secret Russian sales of advanced weaponry to both Syria and Iran illustrates how deeply East-West relations have already deteriorated. A Russian reporter and former military expert had recently obtained proof that Russia has sold and is selling advanced Sukhoi fighter jets, the S-300 air defense complexes and Iskander-E long-range rockets to Iran and Syria. That reporter has now been found dead outside his Moscow apartment, having 'fallen' to his death as a claimed "suicide". There can be little doubt now that Russia is indeed selling such advanced and potent weaponry to Iran-Syria in order to radically raise the costs to the US of any military strike and to pointedly decrease its effectiveness. The weapons systems named here are very problematic for the US because of their ability to get through US, Israeli and Sunni Arab defenses to strike back at the heart of US air power, vital Israeli infrastructure and crucial Middle East oil installations.

China tested its anti-satellite weapon in January in Low Earth Orbit (LEO), where a large number of US spy satellites are located. The resulting debris cloud of perhaps as many as 35,000 objects remains a potentially serious risk to those and other LEO spacecraft. China's test was clearly a response to US moves to weaponize and dominate space. China's assertiveness in stiffening against US-led unipolarity closely matches that of Russia. China has announced a nearly 18% increase in its military budget as it races to become a global military power, increasingly able to threaten and block US global dominance in concert with Russia and their global partners in the rising East and aligned with it.

These and other developments genuinely signify the swift emergence of a Neo Cold War between East and West, one with re-styled techniques and re-fashioned approaches, but with the identical core aim - acquisition by one side or the other of global control and dominance. A new kind of arms race is already evident, as is the heightened sponsoring of proxies by the two sides in an effort to acquire greater leverage in regions of vital interest. Nuclear proliferation and fears of a nuclear catastrophe are mounting. Ideological rivalry is coming increasingly into play as cover and justification for the geopolitical moves on both sides. It is the ideological rivalry between proponents of unipolarity on the one hand and those who push for so-called "multipolarity" on the other, and between the liberal democracy of the West and the so-called sovereign democracy of the East, that characterizes the emerging Neo Cold War.

This widely "unexpected" shape the world order is now taking on has been predicted in illuminating detail right here for over three years. In the pages of this Magazine I did not present this unfolding geopolitical reality merely as a possibility, but rather as a virtual inevitability, and I have presented the persuasive and compelling proof to back up my assertion. That complete portfolio of forecasts and all their supporting evidence is still available here for anyone who wishes to examine it. In the world at large, the vast bulk of experts, analysts and observers won't figure out what's actually happening and what the meaning of events is until after it's over. Here, you get the reliable and accurate forecast and the insightful analysis before it happens - this Magazine prepares you for what's coming so that when it invariably arrives you aren't caught on your heels.

US Economy Stagnating

The US has massively forfeited to its rivals and competitors in Europe, Latin America and Asia its traditional manufacturing base and is in the process of rapidly forfeiting its advanced services base. These now account for only a very small percentage of US economic growth. As such, the concrete foundations of traditional, renowned independent US economic might have been turned to proverbial sand.

Foolishly, the US has cast virtually all its fortunes for economic growth into the unreliable hands of the promoters of the "New Economy" model - that of wealth creation and economic growth generation by artificial asset inflation and debt-based cash extraction - as contrasted with wealth generation by the far more secure and traditional means.

The model won't run properly without low interest rates - economic growth, generated artificially in the environment of low interest rates, grinds to a halt, as it is now threatening to do. There are no more assets left to inflate, energy won't permit a lowering of interest rates, and the real estate and stock assets are collapsing or nearing collapse. US manufacturing and the services sector are unable to carry the US economy forward to sustained growth. Nothing of a material nature remains as an engine of growth for the US economy.

...the reader should be reminded that a hot run-up in prices always immediately precedes a burst. That held true in 2000 when the equities bubble burst, it held true only months ago when the real estate bubble began the burst we are now witnessing, and it will hold true with stocks as well. The current hot run-up in the numbers along with the wobbly behavior in the US stock market indices signify, not strength, but impending burst.

US Economy Descends Toward Strategic Stagnation and Recession

As analyzed and forecast here in insightful detail over the past three years, the so-called "New Economy" model the US has shortsightedly subscribed to to an excessive degree over the past two and one-half decades has at length led the US economy to the following bleak eventuality:

• The nearly total forfeiture to its rivals of its secure and stable, traditional engines of economic growth and real wealth creation

• The shortsighted and grasping, debt-based exploitation and serial exhaustion of the new model's strategically vulnerable, flash-in-the-pan engines of paper wealth generation

• The resulting array of record and still-mounting economic imbalances accompanied by the impending loss of all remaining means of generating and sustaining any growth whatever

How so?

The US has massively forfeited to its rivals and competitors in Europe, Latin America and Asia its traditional manufacturing base and is in the process of rapidly forfeiting its advanced services base. These now account for only a very small percentage of US economic growth. As such, the concrete foundations of traditional, renowned independent US economic might have been turned to proverbial sand. Foolishly, the US has cast virtually all its fortunes for economic growth into the unreliable hands of the promoters of the "New Economy" model - that of wealth creation and economic growth generation by artificial asset inflation and debt-based cash extraction - as contrasted with wealth generation by the far more secure and traditional means.

In the New Economy model, an artificial environment of high liquidity is created via low interest rates and high levels of monetary accommodation, wherein the "value" (or, more accurately, mostly the price) of assets such as real estate, stocks and equities is inflated. As such assets are bought, sold and borrowed against, almost always by incurring Everest-like mountains of new debt, the cash "equity" is extracted (in whole or in part) and spent, thereby generating economic growth on the books. The New Economy, not fundamentally rooted in manufacturing and material services, but rather in paper wealth creation and closely-related financial services, purports to virtually free the nation from undue reliance upon oil. However, the events of the past two years or so have fully exposed that claim as nothing more than a myth. Unrelenting and deepening US reliance upon foreign energy is more its Achilles' heel than ever before.

The problem with the New Economy is that artificially inflated assets suffer eventual exhaustion and price collapse, an event that wipes out most or all of the artificial run-up in "value" but leaves the mountains of debt largely intact. The equities bubble burst of 2000, when $7 trillion of paper wealth simply disappeared into thin air, is an example - the chasm of debt left by that asset collapse feeds directly into the mounting pension crisis, since the pension plans of US corporations were excessively invested there.

The current housing collapse is the latest example. We are currently witnessing only the leading edge of that asset price collapse as the most risky mortgages default first, to be followed by those considered much less risky as the collapse widens. The wobbling of stocks recently is powerful proof that those artificially inflated assets are about to follow real estate downward. Please see the NY Times article of March 10, 2007 entitled, "Crisis Looms in Mortgages" for a complete discussion of the enormous depth and breadth of the looming crisis.

Artificial asset inflation thrives on low interest rates - but so do other, more undesirable forms of inflation. So the Fed has been forced to hike interest rates to keep from losing control to price inflation spurred mostly by high energy prices. Those higher interest rates are killing off the housing "boom" and are helping to cause stocks and equities to wobble. High energy prices and the spectre of inflation on the loose have forced the Fed to move against and abandon the most basic tenet of the New Economy model - sustained low interest rates.

The model won't run properly without low interest rates - economic growth, generated artificially in the environment of low interest rates, grinds to a halt, as it is now threatening to do. There are no more assets left to inflate, energy won't permit a lowering of interest rates, and the real estate and stock assets are collapsing or nearing collapse. US manufacturing and concrete services are unable to carry the US economy forward to sustained growth. Nothing of a concrete nature remains as an engine of growth for the US economy.

Hence, in reality, the New Economy model does not fundamentally do anything to actually free its adherents from undue reliance upon oil, as it promises to do. Instead, the model can only function in an inflation-free environment of cheap oil, such as that during most of the decade of the 1990s. The recent moderation in energy prices is merely temporary because the latest official forecasts of global energy demand growth show a doubling of that growth this year - hence, energy prices will soon resume their strategic rise as Asian demand continues to rise. That portends mounting inflationary pressures and higher interest rates a little further down the road. Those almost assured developments will further strangle the ability of the New Economy of the US to generate growth.

Energy absolutely holds the trump card over the New Economy model the US has come to excessively rely upon - cheap energy will breathe life into the model, but expensive energy progressively strangles it by virtue of the higher interest rates it creates.

US economic growth is fundamentally and progressively being strangled by higher interest rates that cannot be lowered because energy and the unrelenting inflation risk won't permit it. There are no more assets left to inflate, nor any traditional engine of growth that can carry the US economy forward. The US is headed into strategic economic stagnation and recession and nothing exists to permit it to avert that impending eventuality. In fact, as the massive real estate bubble's deflation deepens and quickens, and as the stocks and equities bubbles soon follow suit, the US will have its hands full in avoiding a currency collapse and default.

With reference to the ongoing bursting of the real estate bubble and the impending bursting of the stocks and equities bubbles, the reader should be reminded that a hot run-up in prices always immediately precedes the burst. That held true in 2000 when the equities bubble burst, it held true only months ago when the real estate bubble began the burst we are now witnessing, and it will hold true with stocks as well. The current hot run-up in the numbers along with the wobbly behavior in the US stock market indices signify, not strength, but impending burst.

The ongoing and accelerating transformation of the global economic landscape, the ongoing shift of its true center eastward to Eurasia, is of fundamental and profound importance in the outworking of geopolitical developments. It constitutes the rising East and the simultaneously declining West.

As the key global players more fully realize the bleak prospects for US economic growth on a strategic basis, they will increasingly look outside the traditional US-centric framework for their economic fortunes - again, a process that is already underway.

The fountainhead of geopolitical leverage consists of, and is fueled by, unquestioned economic might and ascendancy. Hence, the ongoing weakening of the underpinnings of those US assets and the strategic economic stagnation developing within the US are already fueling profound geopolitical implications, repercussions and alterations, and will produce yet more.

US economic might used to be virtually independent and unassailable - but that is no longer the case as the US economy has become profoundly dependent upon foreign oil imports and foreign cash inflows - largely from the very powers that constitute its competitors and rivals. The US is no longer in control of its own destiny - its rivals and competitors are. As such, the US has quite literally become a hollowed-out power when viewed from the standpoint of the almost total loss of its former independent and unassailable economic might.

Global Economic Growth Increasingly Fueled Outside the Failing US Economic Model

US economic growth under the New Economy is progressively and strategically failing as the housing "boom" incrementally collapses, stocks signal an impending, strategic "correction" (bubble collapse), manufacturing keeps contracting, and little else in the way of economic growth engines remain.

However, economic growth in Europe continues a steady strategic recovery and growth continues to race ahead in Asia - all in spite of slowing US growth and impending stagnation and recession. Not that US economic stagnation will have no effect upon growth around the world - it certainly will be felt as a drag upon growth elsewhere, but will be entirely unable to stagnate or collapse Eurasian growth, whose fortunes have already transcended the former excessive reliance upon US economic growth to achieve greater reliance upon mounting domestic consumption, mutual trade among the Eurasian partners, and with the rest of the world apart from the US itself.

As such, the global economic status of the US is already transforming from the formerly undeniable position as the key player and the undisputed center of global economic might, to relegation to a position of constituting merely one of many key players. This ongoing and accelerating transformation of the global economic landscape, the ongoing shift of its true center eastward to Eurasia, is of fundamental and profound importance in the outworking of geopolitical developments. It constitutes the rising East and the simultaneously declining West.

The reader must resist the impulse to think only in the stark colors of black and white when analyzing the ongoing transformation of the global economic landscape and its intimately intertwined geopolitical implications, as if the US market and economy might suddenly virtually disappear from the global scene. The US economy isn't going to be utterly demolished - there will be no sudden disappearance of the US market and economy. Rather, more like shades of gray, US economic growth will stagnate and the US economy will begin a strategic, incremental contraction. Alternate engines of global growth, already in evidence, will finish taking the ascendancy, leaving the US in the position of becoming secondary - but certainly not inconsequential. Nevertheless, the impending loss of the key global economic leadership position will certainly be painful for the US in a geopolitical sense.

That economic-geopolitical transformation is already underway, and it is accelerating. As the key global players more fully realize the bleak prospects for US economic growth on a strategic basis, they will increasingly look outside the traditional US-centric framework for their economic fortunes - again, a process that is already underway. The fountainhead of geopolitical leverage consists of, and is fueled by, unquestioned economic might and ascendancy. Hence, the ongoing weakening of the underpinnings of those assets and the strategic economic stagnation developing within the US are already fueling profound geopolitical implications, repercussions and alterations, and will produce yet more.

The balance of global economic might is already tipping to the rising East - it will continue to do so as US economic growth stagnates and US global economic leverage continues to strategically contract. The balance of geopolitical power is already tipping likewise toward the rising East. Unipolarity is in ever deeper trouble as a consequence. Not next decade or the one after, but this very decade will see the collapse of the temporary aberration called US-led unipolarity.

US economic might used to be virtually independent and unassailable - but that is no longer the case as the US economy has become profoundly dependent upon foreign oil imports and foreign cash inflows - largely from the very powers that constitute its competitors and rivals. The US is no longer in control of its own destiny - its rivals and competitors are. As such, the US has quite literally become a hollowed-out power when viewed from the standpoint of the almost total loss of its former independent and unassailable economic might.

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