(geopolitics) (globalism in retreat) (food for thought)
So Apple has shed $200B in light of this. I cite this not that it has material impact in and of itself, but to highlight the impact of geopolitics and the accelerating decline in globalism on the future state of the global and local economy.
I see it first hand in my businesses; we now have to certify the absence of Chinese components in some of our products being delivered to US Government as well as greater (bureaucratic) impediments getting things into and out of China and the US (Europe is unchanged, it’s always been difficult there!). We are seeing a rapid rise in native Chinese technologies, in sectors recently laid waste by COVID, the global semiconductor crunch as a consequence, and the supply chain and logistics crises of the recent past. Meanwhile China is seemingly overcoming high tech sanctions faster than the West thought possible while its own economy is resting on very shaky foundations with a generation of mis-allocated capital expenditure, property especially, facing a demographic cliff that makes Japan’s look like small fry in comparison.
In the past the world has benefited from China’s export of deflation. The reverse is true now. Central banks have raised rates in a (stupid) attempt to reduce demand to match suppressed supply (by landing hammer blows on those who can lead afford and it and least deserve to carry the burden of it) to “reduce inflation” and engineer a “soft landing” for national and the global economy. Fat chance.
There is a rising global shortage of “euro-dollars” (i.e. US dollars outside the US) as US led sanctions backfire and the uni-polar US led world of 1992 to 2015 increasingly becomes bipolar (in both senses of the word), all the while, talk of BRICS abandoning the US dollar for international trade (fat chance) and Treasury Bond yield inversions at a scale not seen since before the GFC tell a story few prognosticators have yet put together into a coherent narrative.
Ah, it means nothing, “she’ll be right”, right?
Meanwhile a hot war in Ukraine and tensions in the South China Sea and Taiwan escalate while Europe stagnates, Britain falls off the Brexit triggered economic cliff, and the US eyes the next Presidential election with a geriatric incumbent, and a false prophet who would do P.T. Barnum proud, facing the wrath of the power elite through a radically politicised “legal system” who looks ever more likely to run his presidential campaign from prison.
And don’t look now, but global planetary temperatures have recorded their highest levels since we actually kept records, while Greece is simultaneously in flames and floods, Maui gets burnt to a cinder, and the stage looks set for ever more of the same, almost anywhere you care to look.
I say all this not to be alarmist, but to set some context for a discussion about the state of the economy and the viability of making any reasonable forecasts as to the future of it. And I’ve not even touched upon the rise of AI (I’ve said a lot about these elsewhere) or the fact that the Nuclear threat has not gone away, we’ve just fogotten it exists.
My point? It’s simply not possible to (productively) talk about the economy on its own. We need to address the elephants in the room and think through the implications for society given the entire thing rests of the ecology of the planet’s biosphere. What kind of economy do we have? Is it suitable and up for the challenges ahead? What sort of changes does it require to be “fit for purpose”? What is that purpose?
