Let us look quickly on the situation in the world today.
China cannot permit a currency collapse today; perhaps in a few years; making one of the cornerstones in the world economy partially stable. At least for now! Interesting here is all the money going out of China the last months, creating a pressure on the Chinese national bank. Since 2014 we find the reserves going down with 762 billion US dollars from 3230 billion US dollars. Chinese companies and private persons move their money to a safer haven, because they believe the Chinese economy is going down. Again we find China using from their monetary reserves for the fifth time in under one year to create a temporal stability. In a way this is not a drama since China did grow dramatically fast in the beginning of this millennium, but the downside is dramatically fast. Today the RMB Yuan is lower than before and the weakening of the currency continues. The struggle to maintain a relative stability in the currency and to fight negative movements in the Chinese economy is the main goal in China. The risk when doing this is a devaluation of RMB Yuan. At a given point in the immediate future China need to devaluate. The main ways to combat this is through a dramatic use of currency savings (what we see today) and by not using reserves. Not using reserves might create a total collapse in the currency exchange. It seems that China have selected the first way – using from the reserves to create a relative stability. The problem is that this is not a cure, and if China has sufficient savings (spine) to survive this economic crisis we are not sure. We just know that the continent that China represents is in problems.
A stable currency is important for helping Chinese companies that have debt in foreign currencies. If RMB Yuan falls, we might expect huge Chinese companies to follow. This is perhaps one of the reasons for the wish for a stable RMB Yuan. When the companies get a stable controllable debt we might expect a devaluation of RMB Yuan.
In Europa we find the refugee/ migration situation creating a hassle in the countries and with the economy. European Union and the Schengen cooperation are in deep trouble. The problem has never really been the refugees, but rather the migration following the same tracks. The amount of people searching for a new and better life in Europe will create changes in the way the migrants and the refugees traditionally have been treated. The pressure in Europe is tremendous and we got only a few months to regroup. Now it is winter and it is a relative pause in the migration, but shortly we will find thousands of people moving again. The crisis is on the edge to become bigger than last year. Like I wrote last year, if the amount of migrants and refugees continues to flow across the borders in Europe we might be facing a new Europe shortly. The fundament of our freedom and our etic system might face great challenges in the next ten years to come. I have nothing against helping people in need, but now the amount of illegal migration is over the limit. We need to see the difference between refugees of war and danger and an economic migrant.
The kind and perhaps naïve Europa are on the bridge to change due to this new aspect. Since the basic foundation is in change we find the political directions to mal adapt to the new situation. The system is not made for this amount of migration. To be to kind, human and considering might be well and perhaps also the way to ruin; because many feel and see that this migration is ruining their country and society thus creating a growth of extremism and weakening of liberalism. This is an extremism we do NOT want and a loss of liberalism we want to keep; liberalism defines us. Another aspect that we need remember is the problem between north and south in Europe. Who should help in this migration situation? The pressure is as we understand in the south, and that does not liberate the north from responsibility. What about East and West in this situation? Europe and Russia for example are in a situation where one is used as a transit country and the other as destination. The rules are simple: Return to transit country, and thereby pushing responsibility to the east. In the midst of this we observe rapidly more and more extreme ways of thinking grow in the population. People stop believing in their authorities and start to look for alternative ways to arrange life and justice; a breach in the social contract. Just remember that in 2015 we counted between half and one million not registered migrants/ refugees in Europe. This is people that need to eat, sleep and to do something, and as not registered they operate outside the society. We might suspect illegal jobs and a short way to criminal activity in this group; many official body’s suspect terrorists hiding inside these groups.
Today we see no end to the conflicts creating the problems in the Middle East, but we find and increased tendency to war, conflicts and economic breakdown in other areas. This is something that will put more to the burden in the near future. In a way we might expect a worsening of the problem with new nationalities and ethnic groups in the near future. The migration crisis will get worse and a political crisis will roar in Europe. Countries as you know them today might change to something unknown today. We do not know what this will be, but radicalization and extremism is common in pressured times. Humanism will fade, other and more brutal and territorial systems will come. Perhaps many will get associations to the Nazi-era. Everything depends on the pressure that Europe will be put under. Nobody wants and few admit it, but the direction today is toward isolation and nationalism!
Most European countries are on the edge of collapse. It is no place for more migrants or refugees before the general quality of life have to be adjusted for the population. The system that was supposed to receive refugees is totally saturated and the politicians are in deep problems. They want to help, but to what cost? Costs benefit and consequences is far wider than predicted. Unemployment rates are increasing and expenses are increasing rapidly. Do not forget that the population in general is cruel towards the system. As a result we start observing a closing of borders. Ah I forgot to mention that migration and refugees have become a billion dollar business… It is expected that peace in the areas will not create a greater difference for the migration problem. Most likely this problem will increase in the coming years. It is possible to see this as a part of the globalization process and as a result of the fact that people want a better life for them and theirs. People from poor living conditions have sufficient money to move to a place where people live better. Globalization has opened a new world for the poor. Made them look through our windows, they like what they see and they want to come here, but the door is not open. With this crisis we observe these days we find many interpreting this as an opening of a door, and as a result they migrate.
As written in previous article we find the migrants to be young men between 18 and 35 years of age from lower middle class in a town searching for a better life. People do not move from war and poverty, they move of a social and economic motivation. In recent years dictators controlled the people, but after them nothing controls the population in the Middle East and North Africa. Ruined states and no control over the young population create a strong temptation among the young men; the lack of stability might have provoked the extreme migration and not only war. Perhaps a tip to reduce the migration problem is to recreate local stability and focus less on democracy. The problem is intimately related to the lack of local stability, war, control of territories and the lack of services; the key is stability. Do not forget that an estimated 60% of all the migrants don’t fill a single requirement for staying in Europa according to international law. To reduce this irregular migration we need to create stability where the migrants come from. If we send them back to their origin the chances are high for that they will just come back.
One big fear is a terror attack against the dam close to Mosul, Iraq. The dam is 100 meters high and 3.4 km long. If the dam gets destroyed it will create a flood along Tigris. 2 hours after destruction we will find the city of Mosul under 20 meters of water. Then the water will move south to Tikrit, Samarra and Bagdad; these cities will have about 1 to three days to run from the water.
The amount of Metan increases dramatically since 2006, and have NEVER been higher; metan increases faster than CO2. Considering the environment metan is about 3000% more dangerous than CO2. The main reason to elevated levels of metan are melting tundra and from the arctic sea. Remember that the temperature on the north pole were 0 degrees before New year – 30 degrees warmer than normal. Researchers are not sure about where the metan actually comes from (!); meaning humans or nature. It is estimated that humans give 40% of the metan gases.
The cheap oil has provoked a reduction in staff with over 30%. The person that loses the jobs does not have any possibility to get a decent job. It is important to know that 95% of the earnings of Angola are from the oil sector (1.800.000 barrel a day); the earnings of the country are estimated 75% down from last year! As a result people lose their jobs, food and gas become more expensive and the life become more complicated. As a result we observe a high inflation rate, and a devaluation of their money. US dollar is worth 400% more now than a year ago.
When will the oil price go up?
When the production of the non-OPEC countries go down we will find a positive change in the oil prices. The main signal is a reduction is the oil storage in the OPEC countries; today 3.000.000.000 barrels. The daily consume is estimated to be 700.000 barrels a day. We need to see a reduction of these storages to confirm that the offer of oil is not higher than the demand. In many ways it is sufficient that the brokers BELIEVE that the storages are on the point of reaching the limit to rice the cost. The experts are thinking about a stable oil price from next year.
Social and economic challenges
Europe cannot solve the World’s problems alone. Receiving everybody from places with a lower living standard is impossible and unthinkable. Still most likely this year will be harder than last year regarding migration, oil and the ticking China bubble. Most important is the migration problem; the apparently never ending flow of people across the borders. The problem is complex and has its root in that some start running from war and conflicts – refugees. Then others start to move from economic difficulties and low social status – migrants. The European countries have made it clear that migrants will be sent back to their origin, but still they come under refugee flag. Human trafficking is a real and existing problem. The numbers are high. 4.000.000 persons have left Syria. 1.000.000 persons have arrived in Europe. Beside this we have thousands from other countries on the way to Europe.
The core in this situation is to gain control. This is not done through panic and strange decisions. The first step these days in the preparation for the summer migration are a stronger border control. Border controls are not what we want, but the situation provokes an increase in border controls.
In the dark areas in African and Middle East city’s where they before sold drugs and sex, they sell trips to Europe (900 US dollars). For many Turkey is the key to Europe. Thousands of persons are shopping a trip for crossing the Mediterranean ocean. Europa does not like this since this is a real danger for the society. This has made Turkey to an important country. First of all EU are going to donate about 14.000.000.000 US dollar to Turkey close for the refugees and migrants. This is money intended for 400.000 Syrian school children, working permit for Syrians and a health care system. The plan is to tempt the people to not cross the Mediterranean ocean through school, job and a life. EU has also started a process to make Turkey a part of EU and to give 75.000.000 persons from Turkey freedom of visa to Europa. It is planes about sending boats to Turkey to pick up about 300.000 persons a year and to divide these persons between the European countries. Today we find this situation in the hands of politicians.