The Long View

Investment Analysis Clubs Macro Economic Trends and Risks
1

People interpret today’s events from the perspective of their own history. People who lived after The Great War (World War 1) could not know that they were living in the “inter-war” period because they didn’t know that World War 2 would happen.

https://www.nytimes.com/2022/02/27/opinion/putin-russia-ukra…

**We Are All Living in Vladimir Putin’s World Now**

**By Ivan Krastev, The New York Times, Feb. 27, 2022, 10:24 a.m. ET**

**....**
**In the wake of Russia’s occupation of Crimea in 2014, Angela Merkel, then-chancellor of Germany, talked to President Vladimir Putin of Russia and reported to President Barack Obama that, in her view, Mr. Putin had lost touch with reality. He was, she said, living in “another world.” Today, we are all living in it. In this world, to quote Thucydides, “the strong do what they can and the weak suffer what they must.”...**

**Over the last two months, the Moscow-Beijing alliance has moved from hypothesis to reality, thanks to the shared goal of challenging American dominance....**

**What does the end of peace mean to Europe? The consequences will be dire. War in Ukraine has the frightening potential to heat up frozen conflicts on the continent’s periphery, including elsewhere in the post-Soviet space and the Western Balkans. ... The most destabilizing effect of Russia’s invasion could be that many around the world start to agree with Ukraine’s president, Volodymyr Zelensky. At the Munich Security Forum this month, he stated that Kyiv had made a mistake abandoning the nuclear weapons it inherited from the Soviet Union. ...** [end quote]

It’s possible that the world will enter a period of devastating conflict during our lifetimes that will make the post World War 2 “Pax Americana” look like an interregnum, much like the period between World War 1 and 2.

Wendy

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The Great War (World War 1) could not know that they were living in the “inter-war” period because they didn’t know that World War 2 would happen.

John Maynard Keynes knew,

In his The Economic Consequences of the Peace, published in December 1919, Keynes predicted that the stiff war reparations and other harsh terms imposed on Germany by the treaty would lead to the financial collapse of the country, which in turn would have serious economic and political repercussions on Europe and the world.

https://www.history.com/this-day-in-history/keynes-predicts-…

The Captain

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War in Ukraine has the frightening potential to heat up frozen conflicts on the continent’s periphery, including elsewhere in the post-Soviet space and the Western Balkans.

My first happy thought is, with about half of Russia’s standing army in Ukraine, and Russian logistics strained, pro-democracy elements in Belarus and Kazakstan might decide it’s a good time to have another go at their dictators.

Steve

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Maybe. But China is the one really calling the shots (Russia is a pizzant with nukes compared to China and the USA). I think China has learned that business, not war, is far more profitable and better overall for them. Sure they want to control Hong Kong (done deal) and Taiwan, and might even make war over it, but I’m not sure if they have wider desires right now (though they thin very long-term, and probably still want to take Japan and surrounding areas over the next few centuries).

Furthermore, China is “using” Russia as a test case, with two benefits to China:

  1. A test case as to how (and when) to plan their Taiwan operation.
  2. To weaken Russia such that it will be defacto controlled by China when that becomes necessary. Controlled in the sense of bowing to their demands, using their currency for commerce, being preferred energy partner/source, etc.