We have a confluence of events on the world stage at present that carry the seeds of massive turbulence not witnessed in generations.
The Middle East is clearly in chaos and because of that energy prices have been going up dramatically.The digitally driven leaderless revolutions manifest via self assembling dynamic networks — as forecast by ATCA in late 2010 — began in Tunisia and Egypt. They have metamorphosed into a global reform movement and uprising of the down-trodden. This is a theme that resonates around the world.
As we witness rising confrontation and conflict in Libya, Bahrain, Yemen, Oman, Syria, Algeria, Jordan and other countries, how long will it be before the cold war between Saudi Arabia and Iran turns into a hot one? Who could have suggested at the start of the year that Western forces would be actively engaged in implementing a UN resolution no-fly zone in Libya, for example?
Where the Middle East goes next is anybody’s guess and it has the capacity to spawn a gaggle of black swans almost on a weekly basis. Should something happen in regard to Saudi Arabia and Iran, the consequences for the price of oil are truly unthinkable. As the price of oil spikes it will devastate growth throughout the world because of rapid consumer demand destruction. More and more of the family budget will be, of necessity, diverted to paying for food and fuel.
Much of the world is busy focussing on more pressing issues but Pakistan is slowly deteriorating into lawlessness and Islamist fundamentalism. Two recent high-profile assassinations of senior political figures — the governor of Punjab and the only Christian cabinet member — who were both well known voices of tolerance, demonstrate the step-by-step radicalisation of that country toward extremism.
The fact that many prominent members of the political and religious establishment have distanced themselves from condemning these heinous crimes, suggests that they are afraid to speak their mind should they become the next legitimate targets. The near talibanisation of some regions in Pakistan, coupled with Islamist fundamentalism and a powerful nuclear arsenal, lead us to be extremely concerned about the consequences for regional peace and stability, should other high profile unfortunate events take place in or around Pakistan.
The Eurozone crisis began with the bailout of Greece and was followed by the bailout of Ireland. It is about to enter its third chapter with the potential bailout of Portugal. The Portuguese prime minister has resigned because he was unable to get approval for his austerity measures from parliament. In parallel, the rating agencies are further downgrading most of the Spanish banking sector as there are severe doubt about the capacity of the Spanish government to bailout all compromised banks fully.
The seeds of severe disruption of the Eurozone also lie in the ebbing support for Chancellor Merkel’s policies in Germany and the lack of capacity within France to act unilaterally to enforce the bailout of Europe. It is now only a matter of time when the next trigger is pulled by the global debt markets that will seriously wound the strength and stability of the Eurozone and cohesion of the European Union.
To add to these pressures, the lack of co-operation between France and Germany in regard to Libya and the NATO framework is going to exacerbate their joint capacity to evolve a comprehensive solution for the single currency as troubles compound.
China is now caught between the devil and the deep blue sea. It has out of control inflation particularly in the food and property sectors and as it attempts to control this runaway train by raising interest rates and increasing bank reserve ratios, it risks derailing the high GDP growth that the Chinese juggernaut has become famous for.
The Jasmine revolution of the Middle East is also being exported to China, although the Chinese authorities are leaving no stone unturned to nip it in the bud. In time, we may yet see a China-specific digitally driven leaderless revolution if the iron rice bowl promise fails because the fantastic growth engine stalls, the price of food remains out of control and the middle-class sees its feel-good-factor continue to erode dramatically.
Pacific Ring of Fire
The Pacific ring of fire is extremely active as a number of earthquakes continue not just in Japan but in other countries framing the Pacific basin. Volcanoes are also becoming more active than usual. Given what has just happened in Japan and what happened in New Zealand before that, is it appropriate to ask, “Are China and the United States next?”
The level of US indebtedness and the weakness of the US dollar are causing extra strains not just in the foreign exchange markets but across all asset classes including commodities, equities and bonds. We have found that most asset classes exhibit a correlation of nearly one and a negative correlation to the US dollar. What this means in practice is that most asset classes go up together, as the dollar goes down in value, and vice versa.
Some argue that the US Federal Reserve policies of Quantitative Easing — QE1 and QE2 — or printing money, have led to the enormous food and fuel inflation we see around the world. The global narrative of US experiments with printing money may not end well if the world loses confidence in the US dollar and/or US treasuries at some point.
Events in Wisconsin and other parts of the US have recently highlighted that the phenomenon of digitally driven leaderless revolutions and self-assembling dynamic networks of resistance is not just restricted to the Middle East. The meme of digitally enabled protest appears to have acquired a global signature, from which neither the US nor Europe are immune, and no government appears to be able to escape.
Shifting Magnetic Poles and Solar Flares
The Earth’s magnetic poles are moving relatively fast causing adjustments to be made to navigation equipment periodically. A number of birds and animals are also finding that they are confused as a result of these dramatic changes. In parallel, solar activity is heightened.
The concerns about solar flares can be summarised as follows: if there is a massive solar flare — or Coronal Mass Ejection (CME) like the Carrington Event in the 19th century — then it could cause our electronics and electric power dependent civilisation to witness the equivalent of a heart failure. If such a truly massive Coronal Mass Ejection (CME) were to hit earth, it could practically take out the world’s electricity generation and distribution systems on a semi-permanent basis. It would take many years, if not decades, to repair the world’s electrical system, even if replacement parts were somehow made available locally. The long term disruption to our critical economic infrastructure including the command and control of industrialised civilisations would be unprecedented.
The radioactive smoke signals coming out of Japan are blowing worldwide, indicating further trouble ahead. The earthquake in Japan led to the Tsunami. This in turn brought havoc to the Fukushima nuclear power plant with multiple reactors. This nuclear crisis is still cascading and is yet to stabilise. The latest ground zero is the contaminated water supply of Tokyo and other districts. As a result Japanese mothers are afraid to mix tap water with other ingredients to make baby food.
Damaged nuclear reactors continue to spew radioactive isotopes that are poisoning fresh vegetables, milk, food products, tap water, air, land and sea across Japan and further afield. It remains to be seen how this unfortunate saga will impact Japan and the rest of the world. Any responsible steps to follow the Chernobyl option of pouring concrete over the nuclear reactors is still being debated. If events get further out of control it may not be possible to exercise the Chernobyl option which will then lead Japan to a scenario of dead zones around the nuclear plant and mass evacuations.
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