It would be poetic, if it wasn’t so scary.
Sensing that we are at the watershed of global events, I decided I needed greater clarity going forwards so I accelerated my plans to go on a zen retreat this week and I am staying at a stunning zen temple in the Korean mountains for 4 weeks. As we do meditation in this real Garden of Eden – surrounded by nature and singing birds all day – every so often you can hear a military helicopter or F15 pass by. Its kind of surreal.
And its all rather symbolic.
George Freidman, the founder of Stratfor, made some pretty shock comments at the annual Strategic Investment Conference, which I have attended in the past. He suggested that a US attack in North Korea is imminent:
“The US is preparing to attack North Korea, according to Geopolitical Futures founder George Friedman — setting the stage for a difficult, messy war with potentially catastrophic consequences.
Speaking Monday to a rapt audience at the 2017 Strategic Investment Conference in Orlando, Friedman said that while it was unlikely the US would take action before President Donald Trump returns home at the weekend, North Korea’s actions appeared to have “offered the US no alternative” to a clash.
According to Geopolitical Futures analysis, evidence is mounting that the enmity between the two is escalating to a point where war is inevitable.
Friedman said that on May 20, the USS Carl Vinson supercarrier and USS Ronald Reagan were both within striking distance of North Korea.
Additionally, more than 100 F-16 aircraft are conducting daily exercises in the area, a tactic that foreshadowed the beginning of Desert Storm in 1991.
F-35 aircraft have also been deployed to the area, and US government representatives are expected to brief Guam on civil defense, terrorism, and Korea on May 31.
All of these strategic moves telegraph one outcome — conflict.
Friedman’s decision to make public his focus on North Korea comes days after the secretive state’s latest ballistic missile launch. The UN Security Council condemned its “highly destabilizing behavior and flagrant and provocative defiance” of the organisation.”
Of course, when you are less than 200 km from Seoul it can be a little disconcerting. Somehow I am strangely relaxed.
Our base base has been that the first steps towards reunification would appear before 2020. And in recent weeks we wrote that a US surgical strike was well in the realms of possibility. We even wondered whether a deal between China and the USA had been done. In my more ‘conspiratorial’ moments, I wondered whether Kim Jong Un’s brother was actually taken out by Western intelligence to send a warning to Kim.
There are many trajectories towards reunification. A surgical strike and an assasination of Kim is the hopeful military case.
The worse scenario , to which George Friedman alludes, is a more serious engagement. Most mainstream think tanks suggest huge death tolls in Seoul in the event of war.
This all stinks of the Ledeen Doctrine: “Every ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business.”
The other more hopeful scenario is a peace deal, and an attempt to bring North Korea into the global system in the same way that China or Vietnam were courted. All the hawkish talk might be to ensure that North Korea does take up any opportunity given to it. Friedman is known to be close to the CIA, so perhaps this is all messaging for the North Koreas. A peaceful change of regime might be also necessary and I have heard from some sources about plans to allow Kim to go into exile, possibly in one of the ‘stan’ countries in Central Europe.
The Bigger Picture
The watershed is really upon us now. Last year we entered one of those immense periods of disorder and unravelling before new order emerges. Perhaps thats why Henry Kissinger decided to publish his book “World Order” that year.
If you have been reading the tea leaves for the last few years and seen how trust towards most institutions in the West including govermnet and the media (that is -the “establishment”) has collapsed, one would be forgiven for thinking that war was inevitable. The elites of society generally look for scape goats at this junctures – a good overseas war or perhaps some divide and rule. In fact its our base case that some form of conflict would intensify – either as traditional warfare, cyber war (with real world impact like electric grids going down)civil war in the West, or a new war on an ‘ism’ like terrorism.
When I was in DC recently, it was the week that Trump announced a large budget increase for the military. Is it all too predictable? Many who voted for him were hoping for an end to endless wars and interventions.
And in Europe we have the intensification of a refugee crisis and more islamic terror attacks. Sadly, we foresaw all of this, suggesting that Europe would indeed see more attacks and probable martial law in different countries.
After devastating attacks on cities from Brussels to Paris, the UK was obviously in the spotlights for 2017. And now with the Manchester bombing we see Prime Minister Theresa May saying we will deploy the military on the streets of the UK. [Update: they have been deployed: http://www.standard.co.uk/news/london/manchester-attack-army-drafted-in-to-protect-london-landmarks-including-buckingham-palace-and-a3546866.html]
I was already horrified in recent years to see machine-gun wielding police officers in London in recent years. Constitutional experts are also dissatisfied although they haven’t been given much airtime by the mainstream media. [MAy is already talking about further clamp downs on freedom of speech https://www.theguardian.com/politics/2017/may/25/theresa-may-calls-on-tech-giants-to-lead-fight-against-online-extremism]
You might think that all of this is necessary. But our countries are spiralling further in to authoritarianism.
Lets hope our base case is also right that there will be an inflection point and we will be well on the road to building healthier societies by 2025, hopefully earlier. I am optimistic. Either way. its good to recall Joseph Campbell’s famous quote about living joyfully with the sorrows of the world. If you’re really depressed then you might delve into some Victor Frankl..
Moody’s just downgraded China’s sovereign debt.
I have been meaning to write an article about different myths out there – a kind of ‘myth busters’ article. In the land of investment, there is always opportunity when consensus builds around a paradigm that is deeply mistaken. Of course, the consensus can sometimes create that reality – this is what George Soros calls reflexivity. But where there is strong consensus or a lot of noise I like to look carefully.
One view that we have picked up on a lot is the notion that with the US election of Trump, China is now the de facto leader of globalisation and adult in the room.
We don’t think that is true. The Wall St Journal write another article about the echoes of Japan. I take this quite seriously, having witnessed first hand the unravelling of more than one Asian nation. Japan I watched very closely.
Obviously, many foreign investors have played China through derivative investments ever since I have been involved whether it was Australian currency, iron ore or Melbourne property:
“Chinese investors are pulling out of Melbourne’s apartment market, prompting a downturn.
However, around 80 per cent of Chinese buyers will not be able to settle because of trouble getting finance, according to Ming Li, a real estate agent in Melbourne’s eastern suburbs who specialises in selling Australian property to Chinese investors.
He said many of his clients had either forfeited their deposits or sold their apartments at a loss.
“The Melbourne apartment market is cooling down,” he said.
“It is kind of the oversupplied market, and the Chinese investors are losing their interest in buying an apartment in Melbourne. The capital gains return is so low.”
I am sure there are still short opportunities out there.
There isn’t much time to explore it this week, but the gap between the stock markets and the data continues to rise. Some key indictors are suggesting strains from the auto recession (https://www.forbes.com/sites/panosmourdoukoutas/2017/05/03/the-coming-collapse-in-us-auto-sales/#41448ab11660) to bankruptcy data, the signals are worrying. And our warnings about San Francisco real estate seem to be unfolding as well.
I continue to like gold as hedge. Unfortunately for gold holders, the cyber currencies seem to have become the de facto vehicle for people trying to get out of the financial system.
But this move might be a little exhausted according to my friend and advisor to the Emerging Future Institute, Alexander Shulgin. He wrote this to his friend on Facebook: ”
“This interview was prognosis and forecasts was made 6 months ago
When i asked all of you to buy bitcoin when it was 200, no one believes
Bitcoin raise12 times ( 1200%) in 15 month
Im in short now( will add short positions on 2500-2550-2590) completely !!. Heading to 2000( first stop) and then 1800 and 1400(probably)”
The interview is here:
Over the course of the coming months we will be looking for some investment opportunities as we get out of stocks – and for timing to get back into cyber currencies if you have got out.
Its going to be a light few weeks in terms of output and I apologise to subscribers in advance. Thereafter we will be boosting the content and have some interesting plans ahead. I have plans to be in Europe/UK over the summer and then we are hoping to do a US tour later in the year. Lets see how things turn out. But we should have some useful insights.
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