Geo Political Risk

[Davexl]

High noon at Second Thomas Shoal

https://www.aspistrategist.org.au/hi...Thomas%20Shoal

[moka]

Thanks Moka!

Found Peter Zeihan's presentation very interesting. Particularly his idea that Biden will win in a landslide vs Trump.

Here is what Peter Zeihan said for those of you who don't have the time to listen to the interview.

Peter Zeihan on who is going to win the US election | 30 with Guyon Espiner Ep.10 | RNZ
https://www.youtube.com/watch?v=VFPuv_OZDg0

4:49 How much of this will depend on the Trump Biden contest?
I mean, if you look at Trump, he's obviously going to be more isolationist. He's talked about threatening NATO's pact. He's talked about letting Russia kind of do what it likes. Whereas Biden seems to have built something of an international coalition around helping Ukraine defend against Russia. He seems to have been more globalist.
How much of this depends on the Trump Biden contest and your view? I would argue that it's two sides of the same coin.
I don't mean to suggest that the two leaders are the same on foreign policy. They're not. But on foreign economic policy, Biden's actually the more isolationist of the two. In essence, we had four years of Donald Trump tweeting out a lot of things, but then never really putting his back into making policy, much less making it stick.

5:42 Biden is much more comfortable working with the tools of power and with the tools of the bureaucracy and when it comes to economic policy, trade barriers, tariffs, state policy, industrialization policy, national economic restrictions. He's been an order of magnitude more involved, and he's ensured that his policy set will outlive him. And what we're seeing in the United States right now is an open, direct confrontation between the left and the right about who can be more aggressive against trade and especially against China.
This isn't a contest between open and closed. This is a contest between two different versions of closed.

Do you believe it is in the national interest of America to withdraw and become more isolationist?
I'm just trying to work out. I mean, given that the US has risen to be the preeminent economic and military power in this last 70 years, this golden era, you've talked about why would they want to withdraw from that?

Well, let me start by saying that the United States is the world's premier power, not because of globalization. If you remove the NAFTA states from the equation, we actually only trade for about three, maybe three and a half percent of our GDP. We are a continental economy, and that doesn't mean there are no links. But an order of magnitude below that of what exists in places like Germany or Russia or China. Second, what I believe what I would like to see is largely not irrelevant because I'm an internationalist. People who believe my way have lost each and every one of the last seven elections, while I guess until the last one when we didn't even have a standard bearer in the race.

7:18 Americans have consistently gone with the more inwardly focused candidate, and that includes the transition from Trump to Biden. Who's going to win? Oh, Biden in a landslide.
Why are you so confident about that? Because that's what we were told in 2016. I can't- I lost count of the number of times I went to see visiting experts who told me there was no chance that Trump could win.
Why are you so confident that Trump will lose 2024? Well, let's start by saying never look at American political polls until after the conventions, because until that point, the independents
aren't answering the phone. We're not there yet. But there's three big things going on.

7:55 First of all, there are fewer Republicans than Democrats. And the Republican strength at the national level has always been about unity. Trump broke that. So he isn't even going to have all traditional people on the right showing up.

Second, we've got this little issue with a challenging guy from the outside.
Robert Kennedy Jr. Who is, how should I say this most discreetly, he's challenging Trump for the bat**** crazy vote that Trump thought he had cornered. And now it's split.

And third, and in my opinion, most importantly, people have just forgotten what happened two years ago in our midterms.
Donald Trump told independent voters that their vote doesn't matter, that it should all be resolved at the primaries, which is where he rules. And their collective response was, ‘Hold my beer’.
And for most of the candidates that he put his finger on to support independence voted against the Trump candidates 4 to 1. We have never had a national election in the United States in which the Republicans won, in which the Republicans didn't capture two thirds of the independents.

9:06 So we are looking at second to the third greatest election wipe out in American history for Trump and his allies and that's before you consider that Trump is now a convicted felon. Yeah, there's not a lot of math here for him. Let's just entertain the idea for a second that you're wrong and that Trump does win.

What would you see as the biggest risks internationally, geopolitically from a Trump second term? You'd have two that I would see that would boil up within the first year. Number one is most likely an American withdrawal of support for Ukraine. And then not too long thereafter, we get one of two things: a massive rearmament of Europe, which I find a little spooky. Or a Russian surge throughout Ukraine that comes up against the European border and then pushes beyond. Which is equally spooky. Neither of those are good for American strategic interests in the long run.

10:02 In the second issue is you would probably take this relatively targeted but very robust approach that the Biden administration has taken against the Chinese economy and replace it with something much more broad spectrum. And we would probably see a collapse of the Chinese America trading relationship before the United States had built out sufficient industrial plant to get on without a China

[moka]

Peter Zeihan is American so his focus is on the US. The collapse of the US empire is taking place now, but that does not mean the end of the world unless conflict is escalated to nuclear war. His analysis depends on a narrow understanding of globalisation i.e. in which he says globe-spanning supply chains are only possible with the protection of the U.S. Navy. He has warned that globalisation as we know it is in its twilight years, with the US becoming increasingly isolationist and pulling back from its post-war role in policing global trades routes. A Doom And Gloom view helps make your book a New York bestseller.

The End Of The World Is Just The Beginning. Mapping the Collapse of Globalization by Peter Zeihan
https://www.harpercollins.co.nz/9780063266926/the-end-of-the-world-is-just-the-beginning/

A New York Times Bestseller!
2019 was the last great year for the world economy.
For generations, everything has been getting faster, better, and cheaper. Finally, we reached the point that almost anything you could ever want could be sent to your home within days - even hours - of when you decided you wanted it.
America made that happen, but now America has lost interest in keeping it going.

Globe-spanning supply chains are only possible with the protection of the U.S. Navy. The American dollar underpins internationalized energy and financial markets. Complex, innovative industries were created to satisfy American consumers. American security policy forced warring nations to lay down their arms. Billions of people have been fed and educated as the American-led trade system spread across the globe.

All of this was artificial. All this was temporary. All this is ending.
In The End of the World is Just the Beginning, author and geopolitical strategist Peter Zeihan maps out the next world: a world where countries or regions will have no choice but to make their own goods, grow their own food, secure their own energy, fight their own battles, and do it all with populations that are both shrinking and aging.
The list of countries that make it all work is smaller than you think. Which means everything about our interconnected world - from how we manufacture products, to how we grow food, to how we keep the lights on, to how we shuttle stuff about, to how we pay for it all - is about to change.
A world ending. A world beginning. Zeihan brings readers along for an illuminating (and a bit terrifying) ride packed with foresight, wit, and his trademark irreverence.

[moka]

The Rise and Fall of an Empire - Ray Dalio

https://www.youtube.com/results?sear...all+of+empires+

0:00 Now when you have the world's Reserve currency the rest of the world wants to save and they save in that currency and that leads the country who has the world's Reserve currency to borrow. It gives them what's called the exorbitant privilege of being able to borrow and print the world's currency. Boy that's a good thing to have.

And then what they do of course is as prosperity continues and asset prices go up, like stocks go up and everything does really well it encourages more borrowing and spending and betting on prosperity and that begins to have a rise in levels of indebtedness. So, you see debt levels rising.

And the third thing it does is it creates greater wealth and values gaps. The wealth that's built up is distributed unevenly and those who make a lot of money then begin to have a larger wealth gap and that creates also an opportunity gap. And if we're lucky enough to have the money we can educate our children well and so on that gives them an unfair advantage as in relationship to others and so this wealth gap increases at the same time as levels of indebtedness increase.

And then of course what happens is the competition increases. The competition increases because when you win and you have the others such as Germany or Japan or other countries destroyed after the war and there are no other competitors then it's a dominant position. But over time others learn and begin to build up like China particularly has increased its per capita income and its competitiveness and so China is a competitor with the United States.

But all through that time it was like the British were competitors with the Dutch and so on. So we see that pattern happen over and over as that power gap narrows then conflicts about how things should go increase and internally there is a conflict over wealth and wealth gaps. And then there's a higher level of indebtedness which makes for a worse set of circumstances and that combination of circumstances now leads to more conflict and more problems. So traditionally you see that if you have a lot of levels of debt, the classic way that you see this is
what does the government do when it doesn't have enough money. It's not like they go into the coffers, the coffers are empty. They have no gold they, haven’t got that money.

So where do they get the money. They have to take the money from somebody else that's either through taxes. People get angry when they're taking it away and there's a big fight over it. So, what they usually do is they print money because and through the Roman times, back in Roman times they had gold coins, they put less gold in the coins. They put other metals in the coins. And inevitably they print money when they want to spend more.

And that of course produces the inflation, it devalues the value of money and then you lose buying power. And when that happens at the same time when there's a large wealth, an opportunity gap that produces a lot of internal conflict of the sort that we're seeing now.

[moka]

Ray Dalio sees U.S. on 'brink of great disruption' as election looms

https://asia.nikkei.com/Editor-s-Picks/Interview/Ray-Dalio-sees-U.S.-on-brink-of-great-disruption-as-election-looms2

Bridgewater founder warns of geopolitical risk from economic warfare with China

Dalio is known for applying lessons from history to his investment decisions, predicting the 2008 global financial crisis based on past crises and profiting heavily while other hedge funds struggled.
His book, "Principles for Dealing With the Changing World Order," describes a six-stage "big cycle" of history. Dalio told Nikkei that the U.S. is in Stage 5 -- on the "brink of a great disruption."

He cited the U.S. presidential election this fall as a major risk factor for 2024. Regardless of whether President Joe Biden or Donald Trump wins, "both have challenging domestic conflicts and international geopolitical conflicts to deal with," he said.
Q: Where does the U.S. stand in your view now, and what will happen next?

A: Stage 5 of the big cycle is the stage that is characterized by great differences in wealth and values that have led to populism of the left and the right fighting to win at all costs rather than compromise -- so at the brink of civil war but before civil war.
It is also characterized by excessive debt creation and the international order being challenged due to a great-power conflict, big technology changes, and sometimes disruptive acts of nature (drought, floods, and pandemics). When these things happen together, that is Stage 5 of the cycle. We are in a classic Stage 5, which means on brink of a great disruption but not yet in one. What happens is still up to us, most importantly our leaders, to either pull back or go over the brink.
The type of civil war that's most likely isn't one with people using guns to shoot each other -- it is state and local governments refusing to follow the directions of the federal government, and chaotic, dysfunctional dealings of the federal government.

Q: Do you think politics will be an issue regardless of whether Biden or Trump wins the presidential election?
A: Both have challenging domestic conflicts and international geopolitical conflicts to deal with.
In the U.S. elections, there's generally a belief that President Biden will not be capable of serving his full term, so there is a question of who will be president, if not Biden, should Biden get elected. There's a worry that the Democrats might be more influenced by more of the extreme left than the moderate left. The Republican Party is controlled by the extreme right, and that means that there will be probably great political conflict in the United States, no matter who wins.

Q: How would turmoil in the U.S. affect the dollar?
A: There is too much debt that will be monetized, as is happening in Japan as well as the U.S. and the eurozone -- so in all three of the world's major reserve currencies -- which will devalue their monies and the debt assets, which are the promises to receive this devalued money. The devaluations will show up in more inflation and higher gold prices, rather than in one currency falling a lot relative to the others. In other words, the debt will be monetized, and the value of all monies will decline. I believe that will be the trend for several years.

If Donald Trump is elected president, he will be very protectionist and will raise tariffs a lot, which will be inflationary. If Biden becomes president, taxes, most importantly corporate taxes, will probably be raised. In either case, there will be large deficits which will threaten the bond market.

[moka]

Ray Dalio sees U.S. on 'brink of great disruption' as election looms

https://asia.nikkei.com/Editor-s-Pic...lection-looms2

Q: Do you think a soft economic landing is possible for the U.S.?
A: The U.S. government's balance sheet and income statement deteriorated to support the private sector. So the government sector is going to be still selling a lot of debt to finance deficits. And I don't believe the inflation rate will come down to the [Federal Reserve's] target or most of the central banks' targets.

Q: China is facing serious debt problems with its real estate slump. Is it facing the aftermath of a burst bubble?
A: The bubble gauge gave a sign of a bubble in real estate and local government debt about five years ago. Neither of these problems is much closer to being resolved. This benefits some other countries like the ASEAN countries including Indonesia, Singapore, Vietnam and India.

In my opinion China needs a debt restructuring, but it's a very difficult and painful thing to do. It's also very politically and economically painful. The bubble gauge now indicates that there needs to be a restructuring and if there was a restructuring then it would improve things, but a restructuring is not likely.
It is now a few years into a challenging period, like Japan when it had its lost decade. Chinese stocks are very inexpensive now, but the structural issues haven't yet been resolved.

Q: What is your view on risks related to China-U.S. tensions?
A: On the geopolitical side, there are heightened risks for China, and the costs of being overextended in fighting with Europe, the Middle East and Asia. Economically, export-related risks related to increased tariffs and charges of dumping will mean that their industries with overcapacity will have problems. I think there is a relatively high risk of economic warfare and a higher-than-normal but low risk of military warfare spreading.
There is, of course, growing geopolitical risk particularly affecting businesses doing business in China. To some extent there is some reluctance to do business in China by foreign investors, because of the geopolitical risk. This is even true for Chinese companies.

Q: With China facing economic headwinds, do you expect more market players to consider investing in Japan?
A: Yes, I think Japan continues to be an attractive market because the pricing is relatively attractive. However, it's not as attractive as it was, particularly now that they're tightening monetary policy. But it's still attractive. The geopolitical situation is also benefiting the Japanese markets.
I would expect that we will have a tighter monetary policy in Japan, but it will have to be gradual because there can be very big losses by the Bank of Japan with its investment in bonds. Equities are still far more attractive than bonds.
It is likely that the huge debt pile will be devalued by keeping interest rates very low relative to inflation and nominal growth, so debt assets like bonds will continue to be terrible investments.

Q: How do you see the BOJ's decision to end negative interest rates affecting global financial markets?
A: The capital flows that came from Japan into certain markets, like the U.S. bond market, will not be sustained. It will be less, and that that will exert upward pressure in U.S. bond yields.
Q: U.S. stocks are trading at record highs, while the Nikkei Stock Average temporarily topped the 40,000-point mark. Some say such developments point to a stock bubble.
A: During a bubble, there are a number of characteristics that include buying on leverage and attracting new buyers who are unsophisticated retail buyers into the market, who are attracted in because of all the attention given to the stock being hot.
Though stocks, especially tech stocks, have been strong, and there has been a lot of enthusiasm, these markets don't have the characteristics consistent with past bubbles.

[X-men]

Donald Trump is stuffed!!

[troyvdh]

No no.In fact I believe that this event will cement his chance of presidency to almost a certainty.

[moka]

Trump wounded in assassination attempt. Biden calls it 'sick': Here's what we know

https://www.msn.com/en-us/news/polit...ow/ar-BB1pWemx

WASHINGTON − Former President Donald Trump was "fine" Saturday night after an assassination attempt left him with a bullet wound to the ear.
The gunman, identified by the FBI early Sunday as Thomas Matthew Crooks, opened fire on a sweltering campaign rally in Pennsylvania, and was killed by Secret Service agents, officials said. One spectator was killed and two others were "critically injured," the Secret Service said.

“I was shot with a bullet that pierced the upper part of my right ear," Trump said on Truth Social, adding that he "immediately felt the bullet ripping through the skin."
The former president was speaking at a rally in Butler, Pennsylvania, when shots rang rang out and the presumptive 2024 Republican nominee grabbed his right ear before dropping to the stage floor.

Trump's ear and face were bloodied moments later when a cordon of Secret Service agents brought him to his feet.
Trump raised a defiant fist into the air as he was hustled off the stage and out of the rally.

I was shot with a bullet that pierced the upper part of my right ear. I knew immediately that something was wrong in that I heard a whizzing sound, shots, and immediately felt the bullet ripping through the skin," he wrote. "Much bleeding took place, so I realized then what was happening. GOD BLESS AMERICA!”

Crooks, the gunman, was positioned on a rooftop approximately 150 yards from the rally venue. A witness told BBC news he had tried to alert local law enforcement of the sniper moments before he opened fire.
The FBI said Crooks, 20, of Bethel Park, Pennsylvania, fired multiple shots from an “elevated position” outside of the Trump rally before Secret Service personnel “neutralized” the shooter, the law enforcement agency said.
The FBI hadn't established a motive as of early Sunday morning.

[troyvdh]

moka ..with respect...We have heard this all day...

And BTW...on 6/11 werent trump supporters chanting "hang Mike Pence hang Mike pence"

Is that correct ?.