Chapter 1382 - 369: Sense of Crisis

Chapter 1382: Chapter 369: Sense of Crisis

The transformation attempt in the province of Bohemia was indeed propelled by the East Africa Central Government, after all, the East Africa economy remains quite vibrant today, and a booming economy can conceal many urban development issues.

Ernst chose the province of Bohemia not only for its unbalanced industrial structure but also because Bohemia is located in the inland area of East Africa, where development is inherently more challenging than the coastal areas.

Ernst predicts that once the European war ends, the world economic powers will face a severe crisis, especially after the European countries restore their economic production order.

During the great war in Europe and the Middle East, other parts of the world were not idle. Besides East Africa and the United States, which accumulated terrifying industrial capacity, Japan, the Far East Empire, British colonies, and even South America’s industry experienced a significant degree of development.

Among these, the development of British colonies was quite outstanding. Regions like Canada, Australia, India, and New Zealand received a large number of industrial orders from the United Kingdom, setting up numerous enterprises.

For instance, during the war, Canada’s industrial investment increased nearly twenty times compared to usual. The United Kingdom and the United States invested heavily in factories in Canada to produce important materials like warships and weapons, while exporting a vast amount of agricultural products, making it an important logistical base for the Allies.

During World War I, the global industrial capacity increased rapidly, which is a very dangerous signal, suggesting the post-war world economy will inevitably face a major crisis.

Ernst foresees that this economic crisis might surpass the 1929 world economic crisis of the previous era, as under Ernst’s influence, the massive entity of East Africa further facilitated the blind expansion of global capacity.

The timing of this world economic crisis eruption is likely to be around five to ten years after Europe completes its war reconstruction.

...

Rhein City.

Ernst is discussing his predictions with East African government officials.

"Currently, the Empire’s industrial capacity surplus is severe, and this round of rapid industrial growth mainly depends on the stimulus from the European war. Once the European war ends, the reduction in European orders will undoubtedly impact the Empire’s economy."

"This impact might have a lag, as under the market economy system, investments carry a blind nature, and nowadays, a good business environment gives confidence to investors and entrepreneurs."

"However, our government should not have such thoughts, and we should understand that the rapid economic growth in previous years was caused by the European war."

"Hence, the government must have a sense of crisis, correct ’rash’ and ’blind’ tendencies in economic fields, guide private investment back to rationality, and steer towards high-quality economic development, shifting from a sole pursuit of quantity to an emphasis on quality and innovation."

It’s easy to foresee that there will certainly be a monumental crisis of industrial surplus in the future, as the market is only so big while all countries are expanding their industrial investments, inevitably causing the world economy to suffer indigestion.

Although industrial development, to some extent, represents progress in productivity, if the distribution work is done poorly, blind industrial development will inevitably lead to the collapse of the original market order.

Hansleden from the Ministry of Commerce of East Africa cooperated and said: "Not only that, but now our trade with Europe is already showing certain risks, and the long five-year war has burdened European countries with debts."

"Therefore, we should worry about whether the European countries will have the risk of default after the war. Of course, the Americans definitely worry about this more than we do, as the United States is now Europe’s biggest creditor. However, the debt scale we have with European countries is also not small."

This is also one of the reasons for East Africa’s emergence at this time to promote European peace, as Europe cannot suck much more blood, and the orders from European countries are merely piles of promissory notes.

Debt can certainly influence European politics, but the prerequisite is having military power to protect it, and the countries dare not renege, yet Europe is precisely the strongest military block in the world.

When the debtor holds "the truth" in their hands, it’s not a good thing for the creditor, especially considering East Africa’s financial industry is not as developed as that of the United States. Even if it could genuinely manipulate European politics through debt, the beneficiary would obviously not be East Africa, especially since the European countries themselves are not exactly saints.

Hence Ernst said: "The issue of European debt must always be maintained within a reasonable range. We cannot rely on the conscience of European countries, so we must further strengthen the debt audit towards Europe. In our trade with Europe, we want real currency or equipment and technologies that can arm our country’s economy and industry as hard currency."

"The major direction of the Empire’s economy is to digest the fruits gained during the war, stabilizing the national economy for smooth and healthy development, promoting industrial structure adjustments, and rebuilding the domestic economic moat."

The East African economy can be described with the word "freedom," which makes the development of East Africa’s economy, industry, and cities like taking a tonic, rapidly swelling and expanding.

However, this aggressive liberal economic development model has tremendous hidden dangers, as East Africa has not established a supporting and stable economic system to accommodate and digest this forced-growth economic achievement.