The End of the World is Just the Beginning: Mapping the Collapse of Globalization

by Peter Zeihan

I’m not attempting to wave away poor capital allocation decisions from the 2000s, but without the subprime pulse, America’s housing issues in the 2020s would be far, far worse.

Since 2007—the year everyone started talking about the Chinese taking over the planet—the supply of yuan has increased by more than eight hundred percent.

Collectively, their savings has pushed the supply of capital up while pushing the cost of capital down.

The ensuing crash from such irrational exuberance knocked roughly 5 percent off of U.S. GDP in the two years before the economy found its footing. Doubling of credit. Five percent economic drop. That’s a good baseline.

Indonesia is a country I tend to be bullish about for a mix of reasons:

Saudis have quite successfully leveraged their oil income stream to acquire rafts of credit for all portions of their system, generating a credit boom of 750 percent since 2000.

Credit in India is up by a cool factor of ten since 2000, with barely a dip along the way. The steady drumbeat of economic expansion has made India a far calmer place politically than its constant bouts of famine and religious and racial churn would suggest. When the correction inevitably arrives, it will be epic.

Florida. You go to Florida for beaches, Disney World, and retirement—not to manufacture stuff. And we’re walking . . .

If Airbus has a future, it will be in reinventing itself as a military supplier for a Europe that can no longer rely upon American strategic overwatch. In the aftermath, Boeing will take over global aviation. The global aviation market will be much smaller, but there’s something to be said for being the last man standing.

Simply a 1 percent increase in the cost of a subsidiary part largely obliterates the economics of an existing supply chain.

One of my favorite places to visit is the interior of Washington State because of topography and people and culture—okay, fine, I go for the wine. The bulk of interior Washington is arid-to-desert. Annual rainfall is comparable to the Chihuahuan Desert. Winter temperatures rarely dip below freezing, while summer temperatures often top 100 degrees. Soil moisture is hysterically low.