Cooking up conflict

One of my more barking posts, when I was in my salad days as a blogger, and green in judgement, was predicting World War Three by Easter (of 2006!). I’m very glad to have been wrong, but I still ponder those elements indicated. I think we have all the ingredients of a messy conflict in place – obviously it requires a certain sort of leadership to actually turn those ingredients into a conflict.

Here is a list of some ‘thinking out loud’ as to the ingredients:

– the US is strong militarily but weak financially; in essence it is a declining empire;
– in contrast, China is strong financially, regionally strong militarily, and is a growing empire.

Tension here is between a USA that won’t – possibly for good reasons – be willing to accept a smaller role, esp in East Asia, and a China that is rapidly asserting itself. You have a lot of other regional powers feeling rather nervous about China, who have traditionally looked to the US for leadership.

This part of the ingredients list is not necessarily conflict-inducing – it depends upon the nature of the leadership being deployed on each side.

Next major bit: Islam and the West. The Iranian situation becomes more scary every month, and it doesn’t just scare Israel it scares the Arab states too. Throw in the instability in Iraq (and the vast oil wealth there) and the problems in Afghanistan/Pakistan and the West’s options seem very restricted. (For what it’s worth I have a growing sense that the UK needs to come out of Afghanistan as soon as possible – the costs are getting larger and the benefits getting smaller the longer it goes on). This is a situation that could literally go ‘bang’ very quickly.

Will China stay out of any Islam vs West conflict? India? Russia?

The way that public opinion in the US seems to be developing is in a more anti-Muslim direction, with all the attendant dangers. I happen to think that more conflict with the khawarij is inevitable, the question is as to how it is done.

Underlying these two major areas of tension is the economic meltdown that is playing out – and will carry on playing out, along with the random acts of God like the Pakistani floods. Peak Oil will be the heat applied to these ingredients, and will likely make everyone’s experience worse.

I wouldn’t even be surprised if Argentina had another go at the Falklands…

OK, end of pessimistic train of thought.

Cooking up conflict

One of my more barking posts, when I was in my salad days as a blogger, and green in judgement, was predicting World War Three by Easter (of 2006!). I’m very glad to have been wrong, but I still ponder those elements indicated. I think we have all the ingredients of a messy conflict in place – obviously it requires a certain sort of leadership to actually turn those ingredients into a conflict.

Here is a list of some ‘thinking out loud’ as to the ingredients:

– the US is strong militarily but weak financially; in essence it is a declining empire;
– in contrast, China is strong financially, regionally strong militarily, and is a growing empire.

Tension here is between a USA that won’t – possibly for good reasons – be willing to accept a smaller role, esp in East Asia, and a China that is rapidly asserting itself. You have a lot of other regional powers feeling rather nervous about China, who have traditionally looked to the US for leadership.

This part of the ingredients list is not necessarily conflict-inducing – it depends upon the nature of the leadership being deployed on each side.

Next major bit: Islam and the West. The Iranian situation becomes more scary every month, and it doesn’t just scare Israel it scares the Arab states too. Throw in the instability in Iraq (and the vast oil wealth there) and the problems in Afghanistan/Pakistan and the West’s options seem very restricted. (For what it’s worth I have a growing sense that the UK needs to come out of Afghanistan as soon as possible – the costs are getting larger and the benefits getting smaller the longer it goes on). This is a situation that could literally go ‘bang’ very quickly.

Will China stay out of any Islam vs West conflict? India? Russia?

The way that public opinion in the US seems to be developing is in a more anti-Muslim direction, with all the attendant dangers. I happen to think that more conflict with the khawarij is inevitable, the question is as to how it is done.

Underlying these two major areas of tension is the economic meltdown that is playing out – and will carry on playing out, along with the random acts of God like the Pakistani floods. Peak Oil will be the heat applied to these ingredients, and will likely make everyone’s experience worse.

I wouldn’t even be surprised if Argentina had another go at the Falklands…

OK, end of pessimistic train of thought.

Does Israel have a future?

The existence of Israel is repudiated by the majority of Arab and Muslim governments, and the organisation Hamas is explicitly dedicated to the destruction of Israel.

Does it have a future?

The population of Israel is approximately 7.5m.
The population of the states neighbouring Israel (Egypt, Jordan, Syria, Lebanon) is 112m.
The Arab population as a whole is 358m.
The Muslim population is 1.57 billion.

Israeli GDP is 200,000 million USD
Arab world GDP is 1,624,042 million USD

Some 11,000,000 Muslims have been violently killed since 1948, of which 35,000, or 0.3 percent, died during the sixty years of fighting Israel, or just 1 out of every 315 Muslim fatalities. In contrast, over 90 percent of the 11 million who perished were killed by fellow Muslims.

Around 1200 people have been killed in Israel by terrorists since 2000.

This is the context in which Israel is repeatedly attacked by the West, which tends to have an attention span shorter than a goldfish. No wonder the people there are wanting their children to emigrate.

Does Israel have a future?

The existence of Israel is repudiated by the majority of Arab and Muslim governments, and the organisation Hamas is explicitly dedicated to the destruction of Israel.

Does it have a future?

The population of Israel is approximately 7.5m.
The population of the states neighbouring Israel (Egypt, Jordan, Syria, Lebanon) is 112m.
The Arab population as a whole is 358m.
The Muslim population is 1.57 billion.

Israeli GDP is 200,000 million USD
Arab world GDP is 1,624,042 million USD

Some 11,000,000 Muslims have been violently killed since 1948, of which 35,000, or 0.3 percent, died during the sixty years of fighting Israel, or just 1 out of every 315 Muslim fatalities. In contrast, over 90 percent of the 11 million who perished were killed by fellow Muslims.

Around 1200 people have been killed in Israel by terrorists since 2000.

This is the context in which Israel is repeatedly attacked by the West, which tends to have an attention span shorter than a goldfish. No wonder the people there are wanting their children to emigrate.

TBTM20100626


I think this is worth quoting in full:

To summarize, and to make the sequence clearer using nothing more than explicit assumptions and accounting identities, let me suggest schematically the list of factors that require either much greater flexibility on the part of surplus nations or much greater deficits on the part of the US:

1. I assume that for the foreseeable future the major trade deficit countries in Europe are going to find it very difficult to attract net new financing. At best they will be able, through official help, to refinance part of their existing liabilities.
2. If these countries cannot attract net new capital inflows, their currency account deficits, currently equal to two-thirds that of the US, must automatically contract.
3. If European trade deficits contact, there must be one or both of two automatic consequences. Either the trade surpluses of Germany and other European surplus countries – larger than that of China and just a little larger in sum than the European deficits – must contract by the same amount, or Europe’s overall surplus must expand by the same amount.
4. We will probably get a combination of the two, but a much weaker euro – combined with credit contraction, rising unemployment, and German reluctance to reverse policies that constrain domestic consumption – will mean that a very large share of the adjustment will be forced abroad via an expanding European current account surplus.
5. If Europe’s current account surplus grows, there must be one or both of two automatic consequences. Either the current account surplus of surplus countries like China and Japan must contract by the same amount, or the current account deficits of deficit countries like the US must grow by that amount, or some combination of the two.
6. If the Chinas and Japans of the world lower interest rates, slow credit contraction, and otherwise try to maintain their exports – let alone try to grow them – most of the adjustment burden will be shifted onto countries that do not intervene in trade directly. The most obvious are current account deficit countries like the US.
7. The only way for this not to happen is for the deficit countries to intervene in trade themselves. Since the US cannot use interest rate and wage policies, or currency intervention, to interfere in trade, it must use tariffs.

Tariffs in the US, Asia and probably in Latin America and Europe will rise. These are big numbers and the risk is that the adjustments are likely to occur rapidly. This means the rest of the world will also have to adjust just as rapidly.

I don’t really see how the numbers are going to work…

TBTM20100626


I think this is worth quoting in full:

To summarize, and to make the sequence clearer using nothing more than explicit assumptions and accounting identities, let me suggest schematically the list of factors that require either much greater flexibility on the part of surplus nations or much greater deficits on the part of the US:

1. I assume that for the foreseeable future the major trade deficit countries in Europe are going to find it very difficult to attract net new financing. At best they will be able, through official help, to refinance part of their existing liabilities.
2. If these countries cannot attract net new capital inflows, their currency account deficits, currently equal to two-thirds that of the US, must automatically contract.
3. If European trade deficits contact, there must be one or both of two automatic consequences. Either the trade surpluses of Germany and other European surplus countries – larger than that of China and just a little larger in sum than the European deficits – must contract by the same amount, or Europe’s overall surplus must expand by the same amount.
4. We will probably get a combination of the two, but a much weaker euro – combined with credit contraction, rising unemployment, and German reluctance to reverse policies that constrain domestic consumption – will mean that a very large share of the adjustment will be forced abroad via an expanding European current account surplus.
5. If Europe’s current account surplus grows, there must be one or both of two automatic consequences. Either the current account surplus of surplus countries like China and Japan must contract by the same amount, or the current account deficits of deficit countries like the US must grow by that amount, or some combination of the two.
6. If the Chinas and Japans of the world lower interest rates, slow credit contraction, and otherwise try to maintain their exports – let alone try to grow them – most of the adjustment burden will be shifted onto countries that do not intervene in trade directly. The most obvious are current account deficit countries like the US.
7. The only way for this not to happen is for the deficit countries to intervene in trade themselves. Since the US cannot use interest rate and wage policies, or currency intervention, to interfere in trade, it must use tariffs.

Tariffs in the US, Asia and probably in Latin America and Europe will rise. These are big numbers and the risk is that the adjustments are likely to occur rapidly. This means the rest of the world will also have to adjust just as rapidly.

I don’t really see how the numbers are going to work…

Ghost (Robert Harris)

Got this to read because I saw the trailer for the movie, and thought it looked intriguing. Fascinating plot – and consideration of what ghost-writing involves – and a satisfying ending, albeit a little predictable. At some stage I’ll have to do a rant on attitudes to the Iraq war, but not today.

Ghost (Robert Harris)

Got this to read because I saw the trailer for the movie, and thought it looked intriguing. Fascinating plot – and consideration of what ghost-writing involves – and a satisfying ending, albeit a little predictable. At some stage I’ll have to do a rant on attitudes to the Iraq war, but not today.