Street fighting men.
It was late Saturday afternoon and I was in Lyon, France, looking for a way to detach myself from the shopping routine, park in a bar somewhere with a glass of wine and kill the time until dinner.
So, I made my way through the Place Bellecour, one of the largest open squares in Europe, with the statue of Louis XIV in the center.
The Yellow West protesters were gathering around the statue holding a big sign “La France n’est pas a vendre”, France is not for sale, and the Gendarmerie troops were taking positions in the little streets leading to the square dressed up in heavy fighting gear. Welcome to the week 20 of the protests.
A little later I was sitting in the panoramic bar on the eight floor of the hotel seeing them fighting on the Raymond Poincaré Bridge. The police tossed tear gas grenades and started moving towards the crowd. People were running away down the river, so the blues fired some more gas after them to keep things moving and suddenly that was it. Just lots of flashing blue lights and everybody went home.
In the bar on the top floor I heard only French language around me – no Russian or Chinese, which is different from just a few years ago.
Times are changing, but these people are not going anywhere, in the sense that they are a big part of reality.
Euro-Asia is the heartland of humanity – of the seven billion people alive today, five live there. What happens there defines how the international system works.
And now something extraordinary is happening - for the first time since the end of World War II the entire region is destabilizing. Whether it is the European Union, Russia, China or the Middle East, there is one important thing to understand – if this region changes, the world changes.
We’re into something unique, which is crisis of exports and exporters of everything.
In 2008 USA and Europe went simultaneously into recession. Their appetite for exports collapsed and country that took the biggest hit was China. China exists on exports, first to Europe and then to the United States. It’s domestic economy couldn’t buy, because the majority of Chinese live in poverty. The average income of a family west of the coast is about that of Bolivia. This is a poor country and if you’re earning $2 a day, you can’t buy an ipad.
As the crisis unfolded, China did what every company would do under these circumstances – it fabricated statistics. As result there was this great illusion in the West that China will soon go back to the rate of growth it had before. The one thing businessmen believe is that we can go back to the way it was. It just never happens.
We’re now in the new normal, and president Xi will rule with iron fist making use of all the power he was given.
Another export addict is Germany – it sells abroad half of its GDP. A 10% drop in exports, not something unheard of, would reduce the GDP by 5% and put at risk the German welfare social model, likely resulting in a change of power.
There is a reason why the Germans were landing money to the countries in the south of Europe – it was so the Italians, the Greeks, the Spaniards could buy more German products. And I don’t believe for a moment that the good folks at Deutsche or Comerzbank didn’t know how this is going to end. Everybody new.
So, what’s next? Germany can’t go anywhere because they need the EU and European markets for exports. The south of Europe is not going anywhere, with the youth unemployment rate of 60% they can’t even afford a bus ticket.
So who is going? Those who can, hence Brexit.
France is slowly boiling; it could be an interesting summer.
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Tom Kubiak is the author of The Traveler