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August 18, 2021 | The World Just Got A Lot Scarier

John is author or co-author of five books, including of The Money Bubble, The Collapse of the Dollar and How to Profit From It, Clean Money: Picking Winners in the Green-Tech Boom and How to Profit from the Coming Real Estate Bust. A former Wall Street analyst and featured columnist with TheStreet.com, he currently writes for CFA Magazine.

The disturbing thing about America’s Vietnam-style departure from Afganistan is not that the Taliban are back in charge. If the 2001 invasion had never happened, they’d be in charge. And if the US had pulled out at any time in the intervening two decades they’d be in charge. So that was pretty much a done deal no matter how well or badly the US played its hand.

What should scare the hell out of anyone who values a more-or-less orderly world is the message America’s apparent incompetence sends to the other predators out there. This message is: The US is run by people who lack a clear sense of their own interests and therefore have no idea how to defend those interests.

This resulting power vacuum is like posting an “all you can eat buffet” sign on the things that China, Russia and Iran covet — many of which the US is obligated to defend.

Let’s start with Taiwan, a breakaway part of China that the mainland badly wants back. The only reason Bejing hasn’t already taken it is fear that the US might violently object. Post-Afganistan, that’s a lot less likely, so …

China Holds Assault Drills Near Southern Taiwan

(Epoch Times) – China carried out assault drills near Taiwan on Aug. 17, with fighter jets, anti-submarine aircraft, and combat ships exercising off the southwest and southeast of the island in what the country’s armed forces said was a response to “external interference.”

In a brief statement that was released on Tuesday, the People’s Liberation Army’s (PLA) Eastern Theater Command said the drills were “using actual troops,” and “recent U.S.–Taiwan provocations … severely violated the peace and stability across the Taiwan Strait

Taiwan, which is a de facto independent country but one that the Chinese regime claims as its own, has complained of repeated Chinese military drills in its vicinity in the past two years or so, as part of a pressure campaign to force the island to accept China’s sovereignty

The assault drills are different from those carried out as a matter of routine by the PLA. Tuesday’s drills were held near Taiwan’s southwestern and southeastern waters, in both the South China Sea and the Philippine Sea, and the Bashi Channel that connects the two seas, according to the PLA’s statement.

“It’s special and rare that the PLA performs a military exercise in both seas. In the military sense, the PLA wants to show that it can cut the U.S. Navy’s transportation line via the Bashi Channel to the South China Sea [from the Philippine Sea],” Su Tzu-yun, director of the Defense Strategy and Resources Division of the Institute for National Defense and Security Research in Taiwan, told The Epoch Times on Aug. 17. “[The drills are] indeed a threat to Taiwan.”

Russia, meanwhile, has exactly one blue-water (that is, ice-free year-round) naval base.  And that base is in next-door neighbor Ukraine. Meanwhile NATO, astoundingly, is trying to convince Ukraine to join an anti-Russia military alliance, an action that Russia considers an act of war.

Why Putin Still Covets Ukraine

(Wall Street Journal) – Writing long, historically focused opinion pieces is an activity more characteristic of think tankers than heads of state, but Russian President  is anything but conventional. Last week he published a 5,000-plus-word article that reviews the last millennium to conclude that Russians, Belarusians and Ukrainians share a common history, faith and destiny.

In Mr. Putin’s view, Western powers have tried for centuries to separate them, but those efforts are doomed to fail. He argues that “the anti-Russia project has been rejected by millions of Ukrainians” in Crimea, the Donbas and elsewhere. The Russian president believes that after centuries of common development and trade, the Ukrainian economy simply cannot flourish without close integration with Russia.

Some observers dismissed the essay as an empty propaganda ploy aimed at distracting Russian public opinion in the face of a surging pandemic. Others saw it as an announcement that Russia will escalate its support for the pro-Moscow forces in the smoldering conflict in eastern Ukraine. Since deception and surprise are fundamental tools of Mr. Putin’s statecraft, anything is possible, but Western powers would be well advised to take the essay seriously. The Russian president’s policies will always and inevitably reflect his calculations about the opportunities and risks he faces at any given moment, but his strategic objectives are unmistakable.

The Ukraine, in short, was always a potential flashpoint, largely because US-led NATO keeps making trouble. But with the US no longer run by the alarmingly unpredictable Donald Trump, Russia likely sees the new administration’s recent fecklessness as actual weakness rather than some kind of random “Art of the Deal” con.

Which means Putin is looking at a rare chance to take crucial piece off the regional chessboard.

Now picture the current US leadership sitting around a conference table — President Biden, Vice President Harris and several woke generals wearing their rainbow pins — confronted with China and Russia making simultaneous moves on Taiwan and Ukraine. Intervention in either would risk nuclear war over pieces of real estate that not one American voter in a million cares about. It’s easy to envision this bunch caving to the inevitable (which would be wise under the circumstances). It’s also easy to picture them being so afraid of looking weak that they roll the dice and escalate.

Either way, the result is chaos, both geopolitically and financially. And the biggest casualty might be the dollar’s reserve currency status since, as a figment of collective imagination, its main selling point is that it’s backed by overwhelming military power. Take that away, and not much is left.

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August 18th, 2021

Posted In: Dollar Collapse.com

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