Postcards: He Who Rules the Seas... (Part One)

As I told Republic Risk investors in a morning video, it's critical to get out of the United States now and then to get a real perspective of the global economy and history. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: He Who Rules the Seas... (Part One)]( As I told Republic Risk investors in a morning video, it's critical to get out of the United States now and then to get a real perspective of the global economy and history. [Garrett {NAME}](floridarepublic) Jun 18 floridarepublic   [READ IN APP](   [UPDATE: REPUBLIC INSIDER WAS RELEASED AT 5:30 AM.]( [CLICK HERE.]( --------------------------------------------------------------- “For whosoever commands the sea commands the trade; whosoever commands the trade of the world commands the riches of the world, and consequently the world itself.” — English adventurer Sir Walter Raleigh, 1829. Dear Fellow Expat: This year, [I picked the shipping sector to outperform]( after a difficult post-COVID period. We’ve had a great year into June, but we’re starting to see some weakness. As we near the halfway point of 2024, I find myself in Genoa, Italy, one of the world’s historic centers of global shipping and trade. This trip offers another stark warning to the United States: He who rules the seas rules the world. As China builds up its shipping capacity at a breakneck pace - the United States must catch up. And we're ignoring lessons from the past. As always, history books are the most important, unused books in politics and finance. The Proud One A few hundred yards from the primary gate of Genoa, Italy, sits a small stone house with a tiny garden in the back. Some passersby overlook it. It's between two main roads and a stairway traversed on guided walks. It doesn’t look much without the signs—a place where a tourist company might hand out free maps. It turns out to be the home of Christopher Columbus. As we passed the home, the Genoese tour guide beamed with pride. Americans on the tour had their opinions of Columbus’ travels to the New World. The tour guide didn’t want to hear the U.S. version of history lessons. There was ample cheer in the name of Christopher Columbus and what he represented to Genoa long ago. Genoa is often called "La Superba" (The Proud One). It offers a fascinating case study of maritime power. Genoa rose from a key coastal location to a strong Mediterranean force. Its story illustrates the maxim, "He who rules the sea rules the world." But a gradual decline tempers this narrative. A powerful nation will become vulnerable... even too comfortable... in its dominance. The Rise of Genoa One can trace Genoa's rise to its critical position on the Ligurian Sea. This great location made the city a key hub for Mediterranean trade. It connected Europe, Africa, and Asia in the exchange of goods and ideas across continents. This period of mercantilism is fascinating. One or two more ships a year could make or break the City's economy. A trickle-down effect spread across the city. Genoa's formidable naval fleet was the key to its dominance. The Genoese navy protected vital trade routes and controlled the Mediterranean waters. The Genoese innovated shipbuilding and other maritime elements, pushing them to the forefront of trade. They set a high standard for naval warfare and commercial shipping. This sea control brought huge wealth to Genoa. It is still apparent in the big homes overlooking the Mediterranean and in the large apartment buildings with fancy foyers and decorative stuccos. The city emerged as a financial powerhouse, with its banks and merchants playing pivotal roles in European finance. Genoese bankers funded monarchs and states, exerting influence far beyond its borders, which helped produce significant political influence. A reader, Luciano, who has been sending me facts about Genoa and Italy in my travels, sent me the following this morning, highlighting the sheer dominance of Genoa during this period. He wrote today: I double-checked Braudel. According to him, the years 1577 through 1627 (not 1580 to 1635, as I wrote you a few days ago) were the Age of the Genoese. In those fifty years, Genoa was the richest country in the world and had most aspects of modern capitalism in place, including venture capitalism. Braudel further states that the capitalism of the Republic of Genoa was so discreet and sophisticated that most historians fail to recognize it and its enormous significance. But being here… today… you can still see its significance centuries later. Additionally, Genoa established colonies and trading posts in the Mediterranean and Black Seas, expanding its economic reach and key alliances. The city took part in the Crusades and other wars, and Genoese ships moved troops and supplies, shaping key conflicts. (Sounds familiar…) Genoa's control over sea trade helped cultural and intellectual exchange, contributing to the Renaissance and Europe's broader cultural development. Notable Genoese figures like Christopher Columbus drove the Age of Exploration. The generational pride of this period is palpable across this region. Politics Change There are parallels above to the American shipping and naval dominance of the 20th century. This parallels how the United States has been losing its dominance over time. Genoa faced a long and costly rivalry with Venice. The Genoese-Venetian Wars drained Genoa’s resources and weakened its navy. Genoa suffered other setbacks, overshadowing victories like the Battle of Meloria. Simply put: The world changed. The discovery of the Americas changed where people moved and lived. A new sea route to India around the Cape of Good Hope altered trade demand. Atlantic powers emerged, like Spain, Portugal, England, and the Dutch Republic. The new routes reduced Mediterranean trade. Instead, ports like Lisbon and Amsterdam gained prominence. Then there were the economic and political problems. The loss of key colonies and trading posts reduced Genoa’s control over trade routes and revenue. Genoa suffered from infighting. Noble families and political factions often fought, leading to assassinations. This strife hurt the city's unity and ability to keep naval and commercial power. Fluctuating governance further compounded these issues, leading to inconsistent and ineffective leadership. Genoa's economic overreach, particularly in banking and finance, created vulnerabilities. The collapse of the Casa di San Giorgio, Genoa’s state bank, and other financial crises hurt the economy. Also, relying on loans from foreign monarchies exposed Genoa to big risks. (This sounds familiar…) As the New World opened, nations had expansive empires and stronger navies dominated global trade. The Habsburg Empire expanded into lands near Genoa. This move further weakened the city's influence. Genoa rose to dominate the seas, which shows the power of sea control. However, its decline shows the many challenges and vulnerabilities of such power. External competition and internal strife weakened Genoa. Is this not America today? Economic shifts and demographic changes also hurt Genoa. Do you think this sounds familiar to you? Foreign competition and the increasing naval power of others hurt Genoa's dominance. Is this not the future? Is any of this ringing a bell in Washington? Genoa's history shows that many factors decide the fortunes of great powers. The story of Genoa is a reminder that power is temporary and that global dominance always changes. Tomorrow, I’ll explain how and why America is falling behind China. And why this will lead to a more expensive, divided, and tenser world. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. Under company rules, editors and writers cannot recommend their positions. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. 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