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World News See other World News Articles Title: The Worst Case It is assumed that the worst case scenario for the Russo-Ukrainian conflict is the direct or even indirect involvement of NATO in Ukraine. If NATO forces came into direct conflict with Russian forces, the result would be total war and total war could easily and quickly lead to nuclear war. This is a remote possibility as NATO has been adamant about not getting militarily involved. The West is content to use the economic weapons at its disposal that it assumes the Russians have anticipated. While there is nothing worse than nuclear war, the fact that it is the least likely outcome means it is not the worst probable outcome. The fact is, the Cold War was a good lesson in the use and non-use of these weapons. Nuclear weapons are last resort defensive tools. A nation will use them as a last gasp at survival. This is why Israel stole the technology from America in the last century. It is why North Korea is developing the ability to deliver a nuke to North America. If nuclear holocaust is off the table and a wider scale war in Europe is off the table, then that leaves the softer, less predictable outcomes. We are already seeing big ripples in the financial markets as people try to figure out the downstream consequences of the economic sanctions on Russia. Despite what the media may claim, Russia, Belarus and Ukraine are not hermit kingdoms. They have a lot of economic links to the rest of the world and are a vital part of the global supply chain. For example, one bottleneck in the chip supply chain is in Ukraine. The world has just started to turn the tide on the chip shortage, but now a vital bottleneck has been closed due to the war. Optimistic predictions said the chip shortage would be over by the end of 2022, but now that date is pushed well into the future. Everyone in the dreaded private sector knows the mischief caused by the chip shortage. That mischief is now going to play out for a much longer period than expected. That last part is where to focus. Economics is about expectations. People will stock up on something, for example, if they anticipate a shortage or price hike. On the other hand, people will take risks in good times, risks like starting a business, buying a new home or hiring new staff. A massive amount of risk has been dumped into the global economy as a result of this war and the response from the West. For the first time in a long time everyone has a reason to not take any risks. On the more tangible side, energy prices are spiking at a time when we have spiraling food prices globally. The last time this happened there was civil unrest throughout the Middle East and North Africa. The so-called Arab Spring was marketed as a quest for freedom but it was a revolt over food and fuel shortages. It is good to remember that the same people who sold those results as a positive are the ones responsible for the mess in Ukraine and responsible for managing the fallout. Ten years ago, the Arab Spring was watched in America during a time of historically low inflation and interest rates. The population was fairly content. Today, America has double-digit inflation and is now about to get an energy cost spike. The population is also at each other’s throats because the people in charge are sure one half of the population are evil insurrectionists. A global depression is not going to help sooth the social tensions that exist in Western nations. Wide-scale supply chain and financial disruptions is probably the rosy scenario end of this conflict in Ukraine. Shippers are already hesitating to take on Russian products, even those products are not sanctioned. It is conceivable that deliveries of vital natural resources like fertilizer, food and energy from Russia, Belarus and Ukraine will be delayed for the next several months. These countries ship a lot of food to the global south, so it is a profoundly serious problem. If that is not enough to consider, think about the last time waves of men flooded into Europe from the south. That was largely driven by economics. Given the socio-economic mood in Europe right now, how well will they handle a million men marching into the heart of Europe from the Middle East and Africa? Who will be blamed this time for the demographic calamity that would follow? Far-right candidate Eric Zemmour could end up sounding like a moderate. The global order that the West, led by the United States, has evolved over the last several decades assumed certain things. For example, populism was assumed to be impossible in a system that efficiently delivered quality consumer goods. It assumed that price shocks were a thing of the past. Similarly, inflation was assumed to be controlled by the judicious control of the money supply. It assumed the free flow of goods, capital and information. The system struggled to contend with the populist revolts of the last decade. Two years of mismanagement of the Covid crisis have brought populism back to the fore and called into question key economic axioms. We have labor shortages all over the place, despite rising wages, but we also have spiraling inflation. This is at a time of historically low interest rates. Prior to the war, this combination was assumed to be impossible and now it will only get worse as a result of the crisis. When the axioms of a system begin to crumble, people quickly begin to doubt the system that rests on those axioms. Confidence in the socio-political order was already falling as a result of demographics and mismanagement. The banging of war drums by the geriatrics ruling Washington is not going to change this. In fact, it is clear that the public blames those geriatrics for the Ukrainian mess. We are entering uncharted territory with regards to public confidence in the system. It very well may be that the worst case scenario is upon us with regards to the Russo-Ukrainian conflict. A fragile system that was already wobbling due to demographics and mismanagement is now about to receive a series of economic body blows. Europe may be getting a new wave of demographic reality. The worst case scenario may be a revolution in public consciousness about the socio-economic order. The elites may be blowing their world up the old fashioned way. Post Comment Private Reply Ignore Thread
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