Third day of Spring? OK. We are prepared to deal with it. The Banks? Some of them seem to be failing. It isn’t the Fall of the West, or at least not exactly. China’s President Xi is visiting Moscow to establish a new global order. It is curiously inverted from the one we used to know. Remember? China was used as a proxy instrumment in the American War in Vietnam by the Russians. Now Mr. Putin appears to want help from the Chinese in their adventure in Ukraine.
The inversion is happening all over. Iran is providing weapons to Mr. Putin. That includes drones and artillery shells.
The latter is necessary because the vast Cold War stocks have been drawn down in the endless barrages across the Donbas River basin. There will be a new world order, according to President Xi. So perhaps we should remember this date as something special in our wobbling global history. A new world, centered on what was called the Middle Kingdom. Girded by a Belt and Road that links factories to consumers in a new and dramatic web of supply chains.
Russia and China linked in a manner that does not comport with the old way of viewing things. The manufacturing done near sprawling Shanghai was once done in Ohio and Indiana. Our drugs and baby formulas also come from overseas these days. So this will be something new to add to our calculations on how things work. Our old perceptions have been eroded and transformed. We still have vague memories of being The Arsenal of Democracy. We assume that if necessary, we can energize the great engine of productivity. Except parts of that engine are located near Shanghai and unlikely to respond to our just requirements.
It may be remembered as today, or yesterday when Putin and Xi met to seal the deal. It is possible this is all a little rushed in the implementation, just as former First Lady Clinton’s drive for the Presidency got a little in front of her ski-tips. Her race against Mr. Trump didn’t have quite the “umph” required. Mr. Biden- billed as an “old School” politician we recognize from our our history of pugnacious politics- scored a record number of ballots from his basement campaign. And now we are engaged in a nineteen month battle to see if this curious new alignment will be returned to power.
There is a lot at stake in this one, and the pile of cards to be played is enormous. Today, we may see how the Central Bank of America decides to increase interest rates. That necessary adjustment to control inflation is at the root of issue regarding the collapse of the bond market, since those rate are set and in force for the length of time in the issuing value. Which is to say, a bond’s value set on the old low-interest rates are now underwater. The interest they produce is less than what inflation is doing to the value. That means the $31 Trillion dollars in debt we have piled up to be a problem for everyone holding Treasury Notes worldwide. It might mean the destruction of the global financial order.
We have privately considered this to be just another of the self-inflicted wounds with which we have inflicted on our grandkids. We will have a chance to talk to a couple of those young humans this weekend and see how they like the prospect of taking out the equivalent of massive student loans while they are still in grade-school. We have a suspicion they might resent the comfort of our attempt at retirement.
There has been a traditional answer in human affairs. It still works, since we intend to exit, stage left, before they realize what we have done to them.
Copyright 2023 Vic Socotra
www.vicsocotra.com