In security conferences around the world, speakers have been describing the rising threats and the rising level of insecurity, while at the same time wondering where the American leadership has been. The violent and chaotic situation in Syria could replicate itself in Ukraine, as well as in other places in the region. The North Korea nuclear situation and possible proliferation down the road coincides with Beijing’s military build-up.
However, as I hear and read these types of reports the most disturbing feature is the sense of powerlessness. No solutions are offered. The US administration seems to be at war with most of the foreign policy experts and policymakers. The concern is that the post-cold war Pax Americana is entering its twilight and the leadership gap that is emerging is taking place at a time when non-western powers are trying to take the lead in economic affairs while America is consumed with trivial things.
Belligerent nationalism and the repudiation of the international rules-based order not only could have severe consequences but also threatens the moral and political authority that the US has been enjoying since World War II. American leadership provided the critical mass for the international order that kept the world running for the last 70 years. Let’s not kid ourselves. Europe does not want to defend herself. East Asian alliances are nothing but an almost unilateral umbrella of US forces.
There is no economic power apart from military power exercised with moral and political authority. However, as we look over the Middle East situation, we observe that the US may no longer be the reference point of regional powers as they formulate policy. It seems that adversaries and allies (e.g. Turkey) think that they can act with absolute impunity against the interests of the US.
The grand bargain between the US and Russia was a utopian pipe dream. Now another nuclear arms race is in the works, which could lead us to an unintended military clash among major powers in one of the world’s hotspots.
The disintegration of the rules-based order is taking place at an interesting juncture of the world economy which is characterized by synchronized global upswing, rising market volatility, rising inflationary concerns, rising interest rates, a dismantling of monetary policies of the last ten years, and a new head at the Fed. The rising economic tensions between higher stock prices (due to the upswing and rising profits) and lower stock prices given the downward pressures of rising rates comes at a time when fiscal deficits in the US will add more than a trillion dollars to the debt, and the threatened trade wars undermine price and economic stability.
We are facing a cocktail that is beyond the realm of maturing business and credit cycles because the international order is being shaken up. Our position, therefore – since we already have witnessed major indexes fall 6-10% within days (such as the FTSE 100, the MSCI Emerging Markets, and even the Dow Jones) – is to be cautious, accumulate some cash, and diversify among uncorrelated asset classes. We reiterate our suggestion that exposure to commodities might be a good place to be, given the geopolitical and geoeconomic circumstances.
American Leadership and Global Insecurity: Market Assessment
Author : John E. Charalambakis
Date : March 7, 2018
In security conferences around the world, speakers have been describing the rising threats and the rising level of insecurity, while at the same time wondering where the American leadership has been. The violent and chaotic situation in Syria could replicate itself in Ukraine, as well as in other places in the region. The North Korea nuclear situation and possible proliferation down the road coincides with Beijing’s military build-up.
However, as I hear and read these types of reports the most disturbing feature is the sense of powerlessness. No solutions are offered. The US administration seems to be at war with most of the foreign policy experts and policymakers. The concern is that the post-cold war Pax Americana is entering its twilight and the leadership gap that is emerging is taking place at a time when non-western powers are trying to take the lead in economic affairs while America is consumed with trivial things.
Belligerent nationalism and the repudiation of the international rules-based order not only could have severe consequences but also threatens the moral and political authority that the US has been enjoying since World War II. American leadership provided the critical mass for the international order that kept the world running for the last 70 years. Let’s not kid ourselves. Europe does not want to defend herself. East Asian alliances are nothing but an almost unilateral umbrella of US forces.
There is no economic power apart from military power exercised with moral and political authority. However, as we look over the Middle East situation, we observe that the US may no longer be the reference point of regional powers as they formulate policy. It seems that adversaries and allies (e.g. Turkey) think that they can act with absolute impunity against the interests of the US.
The grand bargain between the US and Russia was a utopian pipe dream. Now another nuclear arms race is in the works, which could lead us to an unintended military clash among major powers in one of the world’s hotspots.
The disintegration of the rules-based order is taking place at an interesting juncture of the world economy which is characterized by synchronized global upswing, rising market volatility, rising inflationary concerns, rising interest rates, a dismantling of monetary policies of the last ten years, and a new head at the Fed. The rising economic tensions between higher stock prices (due to the upswing and rising profits) and lower stock prices given the downward pressures of rising rates comes at a time when fiscal deficits in the US will add more than a trillion dollars to the debt, and the threatened trade wars undermine price and economic stability.
We are facing a cocktail that is beyond the realm of maturing business and credit cycles because the international order is being shaken up. Our position, therefore – since we already have witnessed major indexes fall 6-10% within days (such as the FTSE 100, the MSCI Emerging Markets, and even the Dow Jones) – is to be cautious, accumulate some cash, and diversify among uncorrelated asset classes. We reiterate our suggestion that exposure to commodities might be a good place to be, given the geopolitical and geoeconomic circumstances.