Can We Step Back from the Brink?

Olympic-level problem dodging probabilities

As of this writing, it was less than a month ago there was a failed assassination attempt on Donald Trump. It was less than a year ago that the Middle East was largely at peace. Five years ago the world was relatively stable and nobody had heard of Covid. Fifteen years ago the US national debt was ~40% of where it is now. Somehow, however, many of these things feel like old news. And these are just examples. 

We are absolutely in the fastest-accelerating period of history since the leadup towards the Second World War. It seems that much of the world is either undergoing or about to undergo a radical transformation. What comes out on the other side is either a guess or up for grabs, depending on your point of view. 

The question at hand is this: Will we go through this change peacefully or violently? Can we manage to step back from the brink of Chaos™ without tumbling into it? 

There’s an old trope — specifically for YouTube videos, but which works for articles as well — that goes like this: When someone asks an open-ended question in the title, the answer is usually “No.” 

In this case, I’ll simply answer: “Maybe — but not for long.” Because this Chaos™ comes in many forms, we’ll have to take a deeper look at some of the broader trends to pass judgment. 

For the record, I’d very much like to avoid a violent conflagration, no matter the size or type. At the same time, many of our systems are dated and no longer work, and need to be discarded or replaced. 

I’m far from the only one who thinks that — the term Great Reset is official lingo, after all — and I think there are many positives that can come from significant changes, and I do hold some hope. At the same time, we’re already in stormy weather, and should anticipate worse.

Our Stupid Economy

On the day this is being written — namely, August 5, 2024 — there’s been big news in stock markets worldwide. The largest one-day crash in Japanese history has taken place and markets around the world have routed. 

Now, is this the end of the world or a 1929 Black Monday event? I don’t think so. Stock markets have been hugely overvalued for some time, especially since the massive Central Bank injections of cash in the Covid panic. I don’t want to get too deep into the weeds on stocks since this is a broad overview, but a correction in bubble-territory stocks like Nvidia was well overdue. 

After all, it’s the backdrop that really matters. This economic turmoil is painted on a palette of out-of-control national debt — most notably in Japan, but in most advanced economies as well. At the same time, BRICS has risen as a challenger to the 70-year-old Dollar (and Euro) denominated economic hegemony. While still nascent, BRICS presents a potential force to be reckoned with in the future. 

To use an example from a nature documentary, think of a young lion that stands a chance of replacing the old lion once he’s well past his prime. The question is how much fight the old fella has got left in him and if the youngster is up to the task. Additionally, any potential BRICS currency is unlikely to replace the Eurodollar system so much as offer an alternative to it. So, really, it’s more likely the young lion starts his own pride, old man be damned. 

There have been doom-mongers regarding the Eurodollar system for decades now, and they’ve been surprised every time the financial power-peddlers find a way to kick the can down the road and stretch that road a little longer. There was a distinct air of despair back in 2013 regarding the Euro, and we’re well past that. The bears missed out on one of the biggest bull runs in history.

But we know that this system is finite, as all fiat systems have been in the past. I previously called the suspense regarding the ever-impending collapse of the modern economic system the Alfred Hitchcock Theory of Debt, because it makes for excellent, if nerve-wracking drama. Pass the popcorn!

Much, of course, depends on what Central Banks decide to do. A major factor behind this particular round of financial panic has been trouble in the Yen carry trade due to massive intervention in the value of the Yen by the Bank of Japan. In short, the Yen has quickly regained a lot of its value, and that’s made many problems for some people, but it was intentional.

On top of problems in stock markets, the potentially quadrillions (!) of dollars in derivative bets placed on top of all sorts of inscrutable financial assets, and Central Bank moves is what happens in the realm of geopolitics. Because that’s what will most likely shape where economies head in the near future — not that financial systems couldn’t have a stroke and drop dead of their own accord, of course, since many countries are in a debt death spiral. 

Conclusion: Can we step back from the brink economically? Too early to tell short-term. Long-term? No way.

War in the Middle East

Hoo boy. Things are getting spicy in the Middle East. As of today, top Russian security official Sergei Shoigu has arrived in Tehran for as-yet undisclosed reasons, but it sends a strong message of solidarity. Israel’s recent “decapitation” attacks of both Hezbollah and Hamas leaders Fuad Shukr and Ismail Haniyeh in Beirut and Tehran, respectively, point to clear escalation in an already-tense situation. Iran has vowed retaliation, as has Hezbollah, though little has happened yet. Notably, Haniyeh was Hamas’ chief negotiator with Israel, which puts a Gaza peace deal well off the table. 

Rumor mills suggest that Iran may attack Israel on August 12, known as Tisha B’av, the Jewish Day of Disaster. This day commemorates the destruction of the First and Second Temples in Jerusalem. Take this rumor as exactly that — rumor — and with a hefty dose of salt, since it comes from unnamed “American intelligence sources” who excel at stirring the pot. Attacking on a day of national Israeli importance isn’t something new, however, as the Yom Kippur war of 1973 evidences.  

Whatever the case, the odds of a broader conflict involving Israel and Hezbollah increase by the day. This occurs as the US sends additional military support to the Eastern Mediterranean, including the carrier USS Abraham Lincoln. 

Following Benjamin Netanyahu’s speech to the US Congress in which he received dozens of applause breaks — which would make even a Soviet Premier’s eyes roll — one can safely assume the US will continue to support Israel. Oh, and the Houthis still largely control access to the Red Sea despite American air efforts. 

Conclusion: Can we step back from the brink of a broader war in the Middle East? Unlikely. 

War in Ukraine

The biggest news out of Ukraine recently, besides that the war is still going on in brutal fashion, is that Ukraine has finally begun flying F-16’s. Whether this is simply a Hail Mary attempt to claw back territory or a way to expend older tech so that military-industrial manufacturers can get contracts for newer stuff is up for debate. It’s difficult to see how a handful of F-16’s will make a significant difference in such an air-defense-heavy environment. 

An important note is that the F-16’s will be based in Ukraine itself and not in Poland or Romania, and that they’ll allegedly be piloted by Ukrainian pilots. Russia has noted that F-16’s are indeed nuclear capable and will be treated as such, meaning there’s a good chance they get destroyed on the ground before many sorties can be flown. Were the planes to launch from NATO territory, there’s a good chance they’d be treated as a nuclear threat, and that’s the path to nuclear war. 

Relatedly, the US has vowed to station long-range missiles in Germany as a threat to Russia. Why, precisely, Olaf Scholz would agree to such a proposition is an excellent question, but Putin has noted that he would respond in kind by increasing Russia’s ability to strike Europe. It’s interesting to note that the US has promised long-range and not intermediate-range missiles, despite the US withdrawing from the INF treaty in 2019. 

The most likely scenario at the moment is that the war continues in a status quo, as Putin is probably waiting for election results in the US in November. So, unless something really wild happens in Ukraine, we’re “simply” looking at more bloodshed for the next few months as Ukraine is unable to dislodge Russia from its acquired territory. Should Trump win the election, an end to the war is likely. Should Harris win, well…who knows. 

Conclusion: Can we step back from the brink of a larger war in Ukraine? It depends if someone does something really stupid or not. 

Turmoil in US

It’s hard to wrap your mind around just what’s happened in the US in the last month. Within a month, Donald Trump narrowly escaped assassination and there are more questions than answers regarding the attempt. President Biden backed out of the presidential race — many argue against his will — to be replaced by his Vice President, Kamala Harris. Harris has then gone on to secure all the Democratic delegates needed to run for president, and all without a convention or a vote. For reference, the Democratic National Convention was planned to start August 19 in Chicago. I say “was” because, well…what’s the point?

That this all happened in the space of less than 3 weeks is nothing short of historic. We won’t know what to make of it until we’ve had some good time to process it. I certainly haven’t had time to digest it yet. Naturally, this occurs on the backdrop of a rapidly rising cost of living, illegal migration at levels never seen before, protests against the war in Gaza, and all sorts of weird-and-weirdly-overlooked things happening like Jordanian illegal immigrants attempting to breach a military base in Quantico back in May, whose identities weren’t released until now.  

And what happens come November? Place your bets!

Conclusion: Can we step back from the brink of turmoil in the US? Unlikely. 

Civil Unrest in the UK 

Riots in the UK have dominated headlines for the past several days, especially following the murder of three young girls by a man born in Wales of Rwandan descent. This follows riots in Leeds in the Islamic community following the seizure of a child by the local government. The specific reasons for the riots are overshadowed by a much larger pictures: that of the overwhelming number of illegal migrants in the UK. 

If you wonder why society is destabilized, the above chart should explain it. No society in any era could assimilate that many people of different cultures in such a short time without trouble. 

In short, the tinder was already laid and all it took was some sparks. It’s no surprise that clashes would come. They’re nation-wide, too, and extend to Northern Ireland. When you have the Union Jack flying next to the Irish flag at protests in Belfast, you should pay attention. 

At the same time, PM Keir Starmer has come out in fierce opposition to the protests he’s deemed “right-wing.” This has further inflamed many who do not consider themselves right wing but do consider themselves fed up. You can be sure many peaceful Muslims are also rightfully upset at being racially targeted. Further violence appears inevitable, though the effectiveness and fairness of the government’s response is yet to be seen. A profound loss of trust in both the media and the government makes any institutional response more likely to further inflame tensions.

Ed. Note: Be sure to see Andy’s comment below for insight regarding statistics, contextual framing, and the intentional divisiveness of both media and government.

Conclusion: Can the UK step back from the brink of further racial violence? Not bloody likely. 

Social Divide and the Consequences of Imperial Overextension

The above examples are only that — examples — of areas Chaos™ has wormed its way into our world. There are many more specific topics, but there are two pernicious and pervasive problems that cast a shadow over the world. 

The first is that teams are forming for what appears to be an imminent major conflagration. This is happening both within countries and without. The teaming-up within Western countries, for example, makes for starkly divided teams that live in strictly separated environments. These information environments are driven both by physical location and tech algorithms, and I don’t see a way to overcome either of those problems at the moment. One team is firmly pro-death or at least anti-human, as well. Here’s a fine and common example in response to referring to rats as “vermin”: 

The above is just one throwaway example of a growing and sense of nihilism and self-hatred. No society that considers themselves vermin can succeed.

On a larger scale, countries are forming teams for a potential major conflagration. It seems to be arriving on schedule. This is precisely what happened prior to the First World War. In this case, the US-UK-Europe-Japan led maritime alliance is opposed by the Russian-Chinese-Iranian led land-based alliance. Whereas Germany was successfully blockaded by Britain’s navy during the First World War, no such maneuver would be possible in a more modern conflict. 

Should a major conflict break out between these nations, which is my greatest current fear (having overtaken economic problems), I believe we’ll quickly discover surface fleets are obsolete after a US carrier is either sunk or damaged. 

These are the consequences of imperial overextension and hubris. Russia and China recently flew a joint reconnaissance mission near Alaska — the first of its kind — as a message that the US would have to face both should a conflict break out. It would likely have to contend with Iran as well. There is no way the current US military can maintain a conflict against three major adversaries. I am happy to argue why in a future post.

The second problem is that we’re in entirely uncharted waters technologically. In eras of new technology, conflicts can go sideways quickly. Since this is indeed uncharted water, I can’t plot a course or see the horizon. I have no idea how tech will play out in conflicts over the next decade, and I doubt many do.

Without going any further, here is my final conclusion: something is going to break. I don’t know what’s going to break first. But, like a long summer without rain, there has to be a storm. Our current institutions are old and dated. That goes from economic models to diplomatic structures, social structures and really just about everything. 

The hope I have, that I mentioned above, is that enough damage can be done to centralizing powers without too much loss of life. Left to their own devices, people are clever enough to rebuild social structures, while centralizing powers take significant time to gather resources. That is, unless AI makes us all slaves, in which case you’d better be nice to your local ATM.