How Empires Fall – Lessons from WWI

Vladimir Putin is a student of Russian history. His interpretation is heavily biased and appears to miss Russia’s involvement in the first world war and the downfall of empires the conflict caused. The Chinese general Sun Tzu said that no country ever benefited from a prolonged war. This bit of wisdom was borne out by World War I at the end of which the Russian Czar was dead and his empire turned into the Soviet Union. The Austro Hungarian Empire was dissolved. The British Empire also began its decline at the same time. And the German state fell under the control of a Nazi fanatic who plunged the world into another war that resulted in Germany be partitioned. Putin’s prosecution of a war against Ukraine that is supported by the US, EU, and their allies has already failed to accomplish its primary goals. As with the contestants of WWI, Putin is spending blood and treasure on a prolonged war from which no good can come for him.

When the GrandChildren of Queen Victoria Ruled Europe and the World

At the beginning of the 20th century the monarchs of Germany, Russia, and the United Kingdom were first cousins. All of Africa except Ethiopia and Liberia were colonies of European nations. Russia ruled the largest nation on earth and the Austro Hungarian Empire was the third the size of Russia and the Ottoman Empire was closer in area to Russia. At the end of the war all of the empires were gone and broken up except for Russia which withdrew from the war after the Bolshevik Revolution. By the second half of the 20th century Europe had few colonies and the USA and Russia dominated the world. It should be noted that in WWI the US only entered the war in the last year and in World War II did not enter the war until it had gone on for more than two years.

End Results of an Expensive War

The Germans as well as the British and French realized early in the first world war that modern warfare was much more expensive that previous wars. All of them made the decision to press on to victory with the goal of making the loser pay in the end. The Allies won after the US entered the war and the Treaty of Versailles set up reparation payments by the Germans that eventually led to the rise of the Nazis and another world war which further bankrupted both sides. In the end Europe and the UK lost their dominance of the world and Russia emerged from the downsized USSR. General Sun Tzu was proven right again that no country benefited from a long term war. This is the lesson that Putin is missing.

How Empires Fall – Lessons from WWI

Will the Russian Empire Be Downsized Again?

Putin has sent a lot of troops to fight in Ukraine but maintains a large force in the East. There is no risk of North Korea, South Korea, or Japan invading Russia but there could be a risk of China moving forces into the resource-rich region to “protect” oil, gas, coal, and mineral supplies. Putin is leveraging his situation in an attempt to win his long-term war with the West. When viewed from the perspective of history his efforts look like German and allied offensives late in World War I such as the second battle of the Somme, the Marne, Passchendaele, Gallipoli, Verdun, and others. The end result of the war was 40 million dead and financial ruin. Throughout the first world war the US spent $22 billion, Great Britain spent $35 billion, France $24 billion, Russia $22 billion, and Germany $45 billion. Best estimates are that Russia is spending $20 billion a day at a time when sanctions are reducing its revenue and isolation from the West will be the end result.

Options Trading in the Era of Putin’s War

We commonly talk about what the DRINCs are up to and how those actions will affect the markets. Today Russia’s war is front and center followed by China’s persistent use of drastic zero tolerance measures for Covid-19. As we note at such times this is not when you want to be trading alone. Join one of the squadrons at Top Gun Options. Protect your wealth during these turbulent times and learn how to print money with options trading no matter which way world events and the market go.