Saturday, June 15, 2024

Jeff Rubin offers A Map of the New Normal

This is my third blog on a Jeff Rubin book.  I can't say I agree with every thing he says, partially due to the fact that circumstances are always changing.  This book is very disturbing, but perhaps should be considered a wake up call.  A provocative quote near the beginning: "This is a truth overlooked by boiling frogs.  It is hard to identify the moment we pass a threshold."

The spark that started his research was a concern of how the Covid 19 pandemic changed the world.  Of course there were many other factors involved, but the world has profoundly changed.

One factor was the response of so many countries to handle the added financial stress caused by the pandemic.  It was labelled "quantitative easing" which actually means printing more money. At the same time supply chains were severely disrupted and to some extent are still being sorted out.  More critically new supply chains have been developed in new directions.

Oil and natural gas routing has changed due to political factors.  Up until recently America was a dominant partner in oil trade with most purchases being done with U.S. dollars which also meant many countries had a surplus of American money invested in U.S. bonds that were critical for American finances.  

Oil and natural gas were subjected to new pressures.  When Russia invaded Ukraine in 2022, one American response was to sanction much of the Russian economy.  Much of Europe depended on Russian natural gas.  There had been a problem with a pipeline going through Ukraine and planning had changed to another pipeline to skirt around Ukraine.  This other pipeline ran into American sanctions.  Looking for alternative buyers willing to defy American sanctions Russia found China and then India. and then many more.  Russia even found Saudi Arabia willing to invest money into the Russian energy infrastructure.  Another significant development was that many consumers were able to pay with other currencies such as rubles and yuan.  

 In desperation to get energy a lot of environmental projects to deal with climate change have been delayed.  A big part of the strategy is to switch energy to environmentally sources, but a problem is that China not only has a stranglehold on rare minerals needed for electric cars, but also a low cost labor force and has developed a high level of expertise.  

A sensitive issue between the U.S. and China is Taiwan.  An edge Taiwan has is they are the dominant  manufacturer of computer chips and semi-conductors that are critical to both the U.S. and China.  The author suggests that a key part of U.S. strategy is that if China does invade Taiwan they will bomb the key semi conductor plant so the Chinese will not get the expertise.  There are plans to set up a comparable facility in Arizona, but of course the labor costs will be much more.  The West has decided to shift mjch of their manufacturing to low cost  overseas nations.  

Food is also very much affected by the Russian invasion.  Both countries are critical to global production of wheat and other grains.  This has made poorer countries suffer and inclined not go against Russia.  Increased oil prices also increased the cost of reaching market. 

Do you wonder why we are dealing with inflation?  There has been more money chasing fewer goods.  A vicious circle has played a role with workers demanding more money and thereby contributing to inflation and wanting still more money.  Governments are now trying to use quantitative tightening.  While the consumer is being squeezed many corporations are making record profits.

Diplomatically Russia and China are expanding their alliances.  China helped mediate a dispute between Saudi Arabia and Iran, both of which have been supportive of Russia.  The BRICS group (originally Brazil, Russia, India, China and South Africa) is courting many countries such as Iran, Ethiopia,Argentina and Turkey.  Already includes over half the world. China has been a generous lender to poorer countries hand and have gained control of many agriculture and energy sectors. 

Russia had controlled Ukraine for over 400 years.  Large numbers of Russian speakers had settled in the eastern part of the country  Zelensky's first language is Russian--his heavily viewed comedy satire series was in Russian.  Still despite Putin claims the Ukrainians do not want to be part of Russia.  When the Soviet Union broke up Russia was assured the newly independent countries would not join NATO.  Not only was that pledge broken, but countries that were part of the Soviet Union, Lithuania, Latvia and Estonia have joined.  Russia feels lied to, threatened and unable to accept that millions of people would rather fight them than join them. 

Russian airspace had been used for travel to Asia, but is now blocked,for most western airlines meaning travel from Europe to Asia is more time consuming and expensive.  

Iran felt unfairly treated.  Trump broke the Iran agreement to stop nuclear development.  Then they were even more tightly sanctioned.  Unfortunately Biden was too slow to rectify the situation.  A little of that history helps explain how Iran is against the U.S.

When Hamas attacked Israel the purpose was to provoke a reaction from Israel.  Netanyahu responded as predicted and much of the world turned against Israel.  This certainly proved a distraction for critics of Putin.  We do not know how the Palestine situation will turn out

My view is the world will not survive as we have known it unless we all find a way to deal with climate change.  Unfortunately there aren't enough people in power who see this as a priority while vested interests try to maintain their position and even see opportunities to expand.  Sacrifices are required by ALL of us, but too many of us see only the short term. 

The situation is evolving, but the "bad guys" have gained some leverage.  Getting their own finances under control is crucial.  The wealthy are well supported politically (both parties), but their long range interests also involve getting government resources under control.  The wealthy want to curtail services to those less fortunate, but that is a mistake.  The government's money needs to be increased i.e. taxes so it can  be spread around, including paying off debts ad strengthening steps against climate change..

Freedom means little to many if equality is not part of it.  Trump supporters seem to feel the need for a strong leader who gets things done, usually with little thought to full consequences. The Western democracies need to find a way to gain more allies.  Climate change won't wait so there is a very delicate balance of fairly distributing energy and food.  American (and others) will need to understand the need for a global balance.  Their attitude towards immigrants demonstrates they do not.  There is still much waste in energy consumption that could help alleviate the leverage their enemies have.

We in the west are losing.  More people need to recognize the global problems of climate change, pandemic, internet crime, the need for energy etc.  There is much else in Rubin's book that should be considered by more people as we deal with the future.

Here are my two previous blogs about Jeff Rubin's books from oldest to most recent. 

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