Thursday, 4 July 2013

The EU and US Are Headed Towards Paralysis (Collapse). And China, Russia?

We have already discussed, in two recent blogs, the demise of the Euro - forecasted for the second half of 2013 - and the collapse of the USA - anticipated around 2017-2018. Let us recall both situations, in which annual data from the World Bank have been used spanning periods from 1970 to 2010. The variables which are taken into account in the analysis of the various countries and regions are listed at the end of the blog (the list shown is that of the USA but the same variables are taken into account for each country).

As discussed in the mentioned blogs, a shrinking, (or even dying) system is characterized by the fact that both its complexity and critical complexity are diminishing. Problem number two is if the two values get close to each other. The system in question becomes critically complex and chaos-driven - basically uncontrollable and running on autopilot (proving there is one). Let's see the case of the EU first (in all graphs, one tick corresponds to one year).

The crisis is reflected in loss of complexity (potential, functionality) after the peak in 2008 which is continuing to fall at alarming rates. But what is worse is that crticical complexity is falling at higher rates - see the two red arrows - which indicates convergence providing of course that no extreme events will change the system's current dynamics (refer to the mentioned blogs for more details). When complexity approaches critical complexity (imagine your cholesterol reaching the maximum value suggested by your doctor) the length of the red vertical segment approaches 0. What this means is that the country's governability index - defined as the ratio of the length of the red segment to that of the black one - approaces 0. The country, as a system, becomes no longer controllable. Many of its parts may still function but the system as such ceases to behave as one, and is just an ensemble of chaotically linked sub-systems.

The situation of the US is similar.

Complexity and critical complexity will, if the current trend continues, cross around 2017-2018. At that time the USA will be in a state of paralysis.  What appears to be common to the EU and the USA is that both systems have reached peak complexity (development, growth) at the same time (2008) although the values are quite different.

But what about other important countries and regions of the World, such as China, Russia and the Arab countries? Let's take a look at China first. The situation is totally different.

We can observe that the evolution of complexity doesn't at all resemble that of the Western World. This is not surprising. While we don't intend to provide an exhaustive analysis of the possible reasons, certainly culture, government and lifestyles come to mind first. The important thing is that there is no clear and visible indication of a tendency for complexity to drop. China, as a system (we're not looking at just the economy - the analysis is holistic and embraces all facets of a society) appears to be much more solid (controlled and controllable) than the Western countries. There is no collapse in sight.

Something totally differentl may be said of Russia.

Russia has been enjoying a period of sustained almost constant complexity increase over the past two decades which has plateaued only recently, around 2009-2010. Again, it is not the scope of this blog to analyze the reasons of this behavior. What is clear, nevertheless, is that unlike the Western world, Russia does not seem to be heading towards paralysis. At least not as of today.

Finally, a glimpse of the Arab countries.

The Arab countries seem to be following the Western world to a certain degree, although their evolution in terms of complexity seems to be more "traumatic" and rugged (let us not forget that the Arab world has been/is torn by unrest and conflict). However, they too, as a system, are heading towards a state of paralysis, disgregation and, potentially, collapse.