Europe And The Greek Drama: The Preface from Flashpoints by John Mauldin, Mauldin Economics

All eyes are focused on Europe this week as another Greek drama plays itself out. I have to admit that in my student days I was forced to sit through a number of Greek dramas, which are admittedly a fine part of our cultural heritage; but while I can appreciate their time and place in history, I really can’t say that I enjoyed them all that much.

And while I can appreciate the passions involved in the unfolding Greek melodrama that is sweeping Europe, I must admit that I’m a bit weary of little Greece commanding center stage in the long-running Eurozone tragicomedy – or maybe we should just call it what it is: a parody of human relations. Mr. Yanis Varoufakis, the left-wing Keynesian economist who most recently taught at the University of Texas (irony intended) is now Greece’s finance minister. He is finding out that his theories about how finance should work in Europe are not how things work in practice. We are getting some pretty nice press-conference rhetoric and inflammatory speeches, though: here’s what Ambrose Evans-Pritchard shared on the topic today:

Mr Varoufakis is braced for an arid meeting on Thursday with his German counterpart and long-time nemesis Wolfgang Schäuble, a man he once accused – borrowing from Tacitus – of reducing Europe to a desert and calling it peace.

“I will try to be as charming as I can in Berlin. I will tell Mr Schäuble that we may be a Left-wing riff-raff but he can count on our Syriza movement to clear away Greece’s cartels and oligarchies, and push through the deep reforms of the Greek state that governments before us refused to do,” he said.

“But I will also tell him that we are going to end the debt-deflation spiral and do what should have been done five years ago. That is not negotiable. We have a democratic mandate to challenge the whole philosophy of austerity,” he said.

The Greeks run out of money in a few weeks, and right now the mood in Frankfurt and Brussels seems to be that no extension is possible without Greece’s agreeing to abide by the previous government’s commitments, with a few concessions (the ones being offered to the side of the table seem to be pretty serious, but who knows?).

And that brings us to today’s Outside the Box. My very good friend George Friedman (no stranger to longtime readers) has written what I think is one of the best books on Europe I have ever read. It is called Flashpoints, and it will be in your local bookstore or on Amazon.

To my mind, this is George’s best-written book. What he does is explore the idea that beneath the surface of sweetness and light in Europe there simmers a millennium of geopolitical issues. He calls these issues “flashpoints.” This is not an academic book but rather a fabulous story of nations and peoples and cities, a history of the world that many of us came from, but few of us understand.

I cannot recommend this book strongly enough. It helps put into context the present smoldering issues in Europe. These are not the issues of the European elite, who tend to want to dismiss them as remnants from an ancient past, but rather they are issues that are driven by the emotions of a significant fraction, if not a majority, of the voting population. We are now seeing the very real potential for populist movements on both the left and the right (depending on the country) to sweep the current management out of their offices.

George does not predict this will happen, but he points out that, given the power of the emotions and the realities of history, it is a possibility. If you want to understand Europe and both to take advantage of the potential and to avoid the problems that Europe poses for your portfolio, this is a book you should read. It gives you context.

George has allowed me to share the preface from Flashpoints as this week’s Outside the Box. I think you will find it intriguing. George is the founder of Stratfor and one of the premier geopolitical thinkers of our time. I’m excited that he has just agreed to speak at our upcoming conference. If you didn’t see my description of the other speakers, you can read it here in last week’s Thoughts from the Frontline.

I will wrap this up quickly as I see my gym time is approaching, as well as the deadline to get this to my team to send on to you. Have a great week.

John Mauldin, Editor

The Preface from Flashpoints

By George Friedman, Stratfor

Between 1914 and 1945 roughly 100 million Europeans died from political causes: war, genocide, purges, planned starvation, and all the rest. That would be an extraordinary number of deaths anywhere and any time. It was particularly striking in Europe, which had, over the course of the previous four hundred years, collectively conquered most of the world and reshaped the way humanity thought of itself.

The conquest of the world was accompanied by the transformation of everyday life. Music was once something that you could hear only if you were there in person. Literacy was useless for most of human history as books were rare and distant. The darkness was now subject to human will. Men lived twice as long as they had previously and women no longer died in childbirth as a matter of course. It is difficult to comprehend the degree to which, by 1914, Europe had transformed the very fabric of life, not only in Europe but in the rest of the world.

Imagine, in 1913, attending a concert in any European capital. Mozart and Beethoven would be on the program. It may be a cold winter night, but the hall is brilliantly lit and warm with women elegantly but lightly dressed. In that grand room, winter has been banished. One of the men has just sent a telegram to Tokyo, ordering silks to be shipped and arrive in Europe within a month. Another couple has traveled a hundred miles in three hours by train to attend the concert. In 1492, when Europe’s adventure began, none of this was possible.

There is no sound like Mozart and Beethoven played by a great European symphony orchestra. Mozart allows you to hear sounds not connected to this world. Beethoven connects each sound to a moment of life. Someone listening to Beethoven’s Ninth Symphony must think of revolution, republicanism, reason, and, truth  be told, of man as God. The art of Europe, immanent and transcendent, the philosophy and the politics, all have taken humanity to a place it has not been before. To many, it seemed as if they were at the gates of heaven. I think, had I been alive then, I would have shared that feeling.

No one expected this moment to be the preface to hell. In the next thirty-one years, Europe tore itself apart. The things that had made it great—technology, philosophy, politics—turned on the Europeans, or more precisely, the Europeans turned  them on each other

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