Five Ways 2014 is Just Like 1914

International Forecaster
A newsletter for economic news, global trends, politics, money, and investment.

By: James Corbett
Date: 2 August 2014

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Five Ways 2014 is Just Like 1914

 The First World War started 100 years ago last Monday. Stop me if you've heard this already. If you have managed to miss this anniversary factoid you can count that as something of a minor miracle. The commemorations of this centenary are everywhere to be found. A series of newly colourized WWI photographs have been widely circulated online, breathing life into the abstract accounts of trench warfare that we remember from history class.

Indiewire has published the “9 Greatest Movies About WWI” in honour of the occasion. The U.S. Department of Defence has curated an online historical exhibit about the war, including a timeline, videos, veteran histories and other resources purporting to document America's involvement in the conflict. The Carnegie Council organized a full-day event in Sarajevo on the 100th anniversary of the assassination of Archduke Franz Ferdinand featuring Ivy League/Fulbright/Globalist insiders lecturing on the reasons that the “Great War” is still important to us today. The Canadian International Council (CIC)—Canada's Council on Foreign Relations sister organization—featured a speech by Larry Summers (“CIC Globalist of the Year”!) on “Will 2014 End Up Like 1914?” Alternative media websites like GlobalResearch.ca have provided a non-MSM perspective on the war and its significance. There is even an entire website, 1914.org, that has been created by the Imperial War Museums and a consortium of international educational organizations that will spend the next four years commemorating and educating the public about the centenary of the “War to End All Wars.”

Certainly there is a lot of interest in this anniversary. Is this interest misplaced? Just another example of that ghoulish, morbid streak in our fascination with history's darker episodes and bloody events?

Not necessarily. As a number of commentators have pointed out over the course of the year, 2014 is eerily similar to 1914 in a number of ways. If this is indeed true, and if we are looking at a similar set of conditions to those that started the First World War, it would behoove us to study these similarities. In that spirit, let's take a look at some of those parallels between our current age and that time of war and bloodshed 100 years ago.

1. A great power is losing its dominance on the world stage

In 1914 the world's great superpower (Britain) was losing its position as the world's undisputed naval power and the trade and economic benefits that such a position brought. Due to overextension and declining economic strength, for the first time in living memory there were serious questions about UK's ability to maintain the security of its Empire while continuing its policy of “splendid isolation.” As a result, Britain cemented alliances of convenience with imperial powers in other parts of the globe (Japan) and even traditional rivals (France and Russia) in order to bolster its position against its rivals.

In 2014 the world's great superpower (America) is losing its position as the world's undisputed military power and the trade and economic benefits that such a position brings. Due to overextension and declining economic strength, for the first time in living memory there are serious questions about the United States' ability to maintain the security of its empire while continuing its position as “policeman of the world.” As a result, America is cementing deeper alliances with regional groupings (the Asia-Pacific Economic Cooperation countries) and traditional partners (EU) that it hopes will bolster its position against its rivals.

2. An up-and-coming regional power is seeking a greater role on the international stage

In 1914 a rising economic and military power (the German Reich), frustrated by a defensive superpower (Britain), increasingly came into diplomatic and military tension with that superpower. This rising force, eager to expand its territorial claims in order to underwrite its economic growth and increase its geopolitical clout, attempted to assert its dominance in Africa and the Pacific. Britain's attempts to contain the Reich backed it into an ever-tighter pact with its allies that included economic ties and pledges of military support.

In 2014 a rising economic and military power (China), frustrated by a defensive superpower (America), is increasingly coming into diplomatic and military tension with that superpower. This rising force, eager to expand its territorial claims in order to underwrite its economic growth and increase its geopolitical clout, is attempting to assert its dominance in Africa and the Pacific. America's attempts to contain China are backing it into an ever-tighter pact with its allies that includes economic ties (BRICS) and pledges of military support (Shanghai Cooperation Organization).

3. Threats to the global reserve currency are disrupting the world economic order

In 1914 the gold exchange standard was at its zenith on the international stage. By that time many countries had pegged the value of their currency on the international stage to the gold-backed British pound, thus creating a de facto gold standard for international trade. However, the system had inherent faults that benefited its backers (Britain) at the expense of the smaller countries, which frequently ran into problems dealing with balance of trade surpluses and deficits. Upon the outbreak of world war the system broke down completely and effectively ended that economic order once and for all.

In 2014 the dollar as a world reserve currency is at its zenith on the international stage. The vast majority of international trade is settled in dollars and all countries' central banks need dollar holdings to finance trade deficits and account for surpluses. However, the system has inherent faults that benefit its backers (the US) at the expense of the smaller countries, which are forced to finance increasingly precarious American debt and an increasingly unpopular series of military adventures. Many analysts are now pondering the breakdown of the dollar reserve system and a world war decoupling the rest of the world from the dollar is now a serious possibility.

4. A regional power struggle threatens to ignite a war between major powers

In 1914 the extremists of warring ideologies (socialists and anarchists) committed assassinations and terror attacks in their battle for the control of a peripheral region (the Balkans). Although these regional struggles did not directly involve the great powers, it involved interests and alliances in which these powers had a huge stake. All it took is one seemingly minor incident (the assassination of Archduke Franz Ferdinand) to draw in the world's largest military powers and send the entire world marching off to war.

In 2014 the extremists of warring ideologies (radical Sunnis, Shias, Zionists) commit assassinations and terror attacks in their battle for the control of a peripheral region (the Middle East). Although these regional struggles do not directly involve the great powers, it involves interests and alliances in which these powers have a huge stake. Many believe that all it would take is one seemingly minor incident (the assassination of an Israeli politician? a provocative incident at the Dome of the Rock? a staged attack on Turkish interests in Syria?) to draw in the world's largest military powers and send the entire world marching off to war. (Alternatively, the peripheral region may be Eastern Europe, the struggle may be between Ukrainians and Eastern Ukrainian separatists, and the provocative incident may be the downing of a civilian aircraft. Or the peripheral region may be the Asia-Pacific, the struggle may be between China and the Philippines, and the provocative incident may be a naval skirmish over disputed waters that turns into a shooting war. Etc., etc.)

5. A world convinced that a major war is impossible stumbles directly into one

In 1914 the received wisdom is that large-scale war between the great powers is impossible. Yes, there are military plans in place for various contingencies, but the general public thought that the increasingly interlocking nature of the world economy meant that the major powers couldn't afford to go to war with each other. At the beginning of 1914 the last thing the average person would have expected is that the world would be plunged into all out war within the year.

In 2014 the received wisdom is that large-scale war between the great powers is impossible. Yes, there are military plans in place for various contingencies, but the general public think that the increasingly interlocking nature of the world economy means that the major powers couldn't afford to go to war with each other. At the beginning of 2014 the last thing the average person would expect is that the world would be plunged into all out war within the year.

When put back-to-back like this, the similarities start to seem more than a little ominous. The fact is that, just as in 1914, there is a declining superpower that appears to be in an escalating confrontation with its rivals and there are any number of places around the world where regional allies have a stake in aligning with one side or another in this struggle. The world is polarizing and battle lines are being drawn. BRICS are being laid over the Washington Consensus and new alliances are arising to counter an increasingly aggressive NATO. The economy is in a precarious state and a new international economic order is coming into view.

So is WWIII inevitable? Not necessarily. Not only is there every indication that WWIII would look nothing like WWI, but there are certain key differences between 2014 and 1914 that might help us avert the worst-case scenario. Let's examine the ways that our time differs from that of the “Great War” era.

1. We live in a post-World War, post-Hiroshima, post-Cold War world

100 years ago the public could be forgiven for stumbling into a world ll, nothing quite like it had ever happened before in history. The idea that a war could reach to every corner of the globe, take millions of lives, be waged with new and frightening machinery of mechanized efficiency, and last for four years would have been almost unthinkable to the average citizen of early 1914.

In 2014 we have no such excuse for lack of imagination. We know the horror stories of trench warfare and the senseless slaughter of tens of thousands of lives for the purpose of acquiring a few inches of enemy territory. We know that wars can last years or even (as in the Cold War) decades and engulf every corner of the globe. We know that the technology of warfare has advanced to the point that a total war today could destroy the entire population of the earth many times over through the use of nuclear (or biological) weapons.

In 1914 war was something that could still be glorified and valourized, a heroic and gentlemanly way for a man to fight and die for his country. In 2014 only the most foolhardy maintain such poetic illusions about the grim realities of warfare.

Granted, this does not insure us against the possibility of another world war, but it certainly does provide every incentive possible for us to avoid such a conflict or stumble blindly into one.

2. WWIII will not look like WWI

As Simon Black notes in an insightful podcast on the subject released last month, there is an old adage that militaries (and populations) are always preparing for the last war, not the next one. In this case, the public still by-and-large envisions a world war scenario as boots on the ground conflict, or, at the very least, aerial warfare. But warfare in the 21st century will almost certainly not look like this or take place in this manner. The warfare of tomorrow will be cyberwar, it will be currency war, it will be psychotronic war, it will be weather warfare. In fact, it will almost certainly involve technologies that the public cannot yet even imagine, let alone account for.

Again, this does not mean that world war will not break out, but if it does it will not be armies lined up on battlefields or machine guns firing from trenches. In fact, as country after country continues to take the human factor out of their military altogether, we face the prospect of a war in which no soldier ever looks any of his victims in the eyes.

3. The US' rivals are not yet in position to confront the superpower

In 1914 the German navy was not quite as strong as Britain, but it was at least comparable. In terms of industrial production, Germany had actually surpassed Britain. In 2014 there is no military on the planet that has anything even approaching America's capabilities, and there is no other economy with markets diversified or developed enough to claim sole global superiority.

In terms of raw, head-to-head combat, there is absolutely no question whatsoever that the US is light years ahead of its opponents. The US military budget is still orders of magnitude larger than its closest rival and larger than all of its main rivals put together. The technologies that it employs that we know about are fearsome enough, and the technologies that have yet to be admitted are doubtless even more destructive. China's navy pales in comparison and the old glory of the Russian Red Army is nowhere to be found (except, perhaps, in its nuclear arsenal).

In terms of global trade, America's overall dominance may be in decline but it is still the only country in the world with a currency that could feasibly take the role of world reserve currency. No other country has the economic, financial or military means to back up a global economic system. China's growing economy still lacks a developed or diversified banking system, mature or stable markets, or even a convertible currency that would be the absolute bare minimum for a role in the global drivers' seat. The only potential rivals to American dominance at this stage are large regional or international groupings that are themselves in deep trouble (the EU) or are held together by loose association and occasional internecine struggle (BRICS).

In short, 2014 is not 1914. There may be similarities, and those similarities may yet lead us into war, but it is by no means inevitable. We are not fated to play out another conflict of senseless destruction and there is still the time and space for an engaged and informed free humanity to wrest control of this world system from the insane kleptocratic psychopaths who are currently steering it off the cliff. We must resist the temptation to give into historical fatalism, and, like Shakespeare's Caesar, admit that if we do engage in yet another “War to End All Wars” then the fault, dear Brutus, is not in our stars but in ourselves.

11 countries near bankruptcy

After years of bitter court battles with creditors, Argentina has defaulted on its debt, according to rating agency Standard & Poor’s. After failing to come to an agreement with creditors from its previous default in 2001, the country missed necessary bond payments on July 31, triggering the default announcement. As of publication, other organizations, most notably the rating agency Moody’s Investors Service and the International Swaps and Derivatives Association, a derivatives trade group, have yet to release public statements confirming the default.

Argentina is not the only country that has struggled, or even failed, to pay its debt in recent years. It is hardly the only country with a severely impaired credit rating either. Alongside Argentina, Moody’s currently lists 10 other countries with a rating of Caa1 or worse. A Caa1 rating is several notches below Ba1, which still carries substantial credit risk. Based on ratings from Moody’s Investors Service, these are the 11 countries at risk of default.

The countries with the lowest credit ratings significantly differ from one another. They span the globe, ranging from Greece and Ukraine in Europe, to Pakistan in Asia, to Ecuador, Venezuela, and Belize in South America.

These nations also suffer from vastly different problems. Some nations, such as Ukraine and Egypt, owe their recent downgrades to political conditions. Others, such as Belize and Ecuador, have actually been upgraded in recent years based on their improved financial positions.

When a government has a great deal of debt relative to the size of its economy, its credit rating may also be lower. Three of the nations potentially at risk of default had among the world’s highest debt levels, at 120% of GDP or more based on 2014 estimates. According to the International Monetary Fund (IMF), Greece’s debt is projected to hit nearly 175% of GDP by the end of this year, more than that of any other nation in the world except for Japan.

http://finance.yahoo.com/news/11-countries-near-bankruptcy-223350842.html