Unbelievably this past week went by with almost no Western press coverage of China and Russia's new partnership. What coverage there was did not even look 5 seconds into the future as to what it really means. The biggest events were the $400 billion energy deal which will include pipeline infrastructure and the exclusion of dollars. We accused China of spying and indicted 5 of their military officers of espionage. The Russians also test fired an ICBM just prior to a massive "joint" naval exercise with China. This was all followed by a Chinese fighter jet passing within 50 meters of Japanese fighters, a dangerous game of "I dare you."
China as I mentioned last week dropped using Microsoft's Windows 8 on state owned computers and since then in very big news told all state owned entities to discontinue business with U.S. consulting firms. Cisco says that they have not received any new Chinese orders in a month and IBM supercomputers are now being taken out of service. It is of utmost importance that you understand what is happening right before your very eyes. The U.S. is being isolated and cornered on its own with WWIII already begun. No, no shots have been fired yet (with the exception of Syria and Ukraine so far) but this is yet to come. So far it has been a war of words and finance, finance being what it's all about.
I wish that Americans would for their own sake wake up to what is happening because one morning soon we will wake up to go to work (or not) and our world will have changed. Actually, it is better said that our world will have "been" changed for us. Our world is changing right in front of us and in the open yet so few see it. China and Russia (along with over 100 other countries) are none too pleased with the way we have "run the world." Unfortunately, this tandem now has the ability to steer our destiny and if they wish, destroy our way of life.
I have seen analysis that states the Chinese will (can) never cut ties with the U.S. because it would kill their exports, I disagree with this. I truly believe that this latest announcement of state owned companies dropping business with U.S. consulting firms is only a precursor of things to come and ultimately the start of a trade war. I wrote a week or two back that "They Don't Need Us We Need Them" and this is true on so many levels. It is true financially, economically and from the standpoint of "our way of life."
I don't think that even those who understand this concept really understand just how easy it now is for the Sino Russian partnership to cripple the West. A concerted dumping of dollars and U.S. treasuries coupled with demands for the delivery of gold and silver from our impaired vaults would pretty much do the trick financially. If this were followed by a trade embargo of physical products, a trip into Walmart will become a past luxury. You can pooh pooh this analysis if you'd like, if I (we) understand this, the military minds in both Russia and China understood it far earlier.
I ask you this, do you believe that our "dependence" on China for capital and goods was a fluke thing or happened just by chance? No, just as a drug dealer gives enough "freebie" products early on to "hook" the junkie, this is what has happened to us. China made it easy for us to borrow money and to consume products because they supplied us, they can just as easily shut off the spigot. Could they have just shut off the spigot for no reason? Physically yes but practically no because then they would be the bad guys in the eyes of the world. No, they waited for the U.S. to "cheat" enough times in visible fashion so that the world saw with their own eyes. We have spied, cheated, stolen, killed foreign leaders and supported coups all over the world, were China to shut us off in any or every fashion the "world" would more than likely applaud at this point.
I am so saddened to have come to this conclusion because I grew in the era where the U.S. wore the white hat and stood for justice. Unfortunately this is no longer the case. Neither allies nor business partners know what to expect from us anymore. What we say, we don't do and what we do, we say we didn't do it. Foreigners see this as plain as the nose on their faces; for the most part Americans unfortunately don't see it at all. "We" don't see it because we don't want to, we don't want to because it is as "ugly" as anything we've ever seen.
Please understand that the Chinese are assuming a leading role in many separate yet connected areas. This is being done "gracefully" and they have allowed the U.S. to flail our arms and speak poorly for the world to see. On any given day the Chinese have the ability to change our lives forever. No charts or crystal balls exist to tell us when this will happen, all I know is that they will... because they can and we have abused our power to the detriment of others and done it publicly. If you truly understand the Eastern mindset, they have "helped" us do it of our own free will.
I have been asked why I am writing so much about Russia and China. You must understand that as I see it, the Sun is rising in the East and setting on the West. We (the U.S.) have been hanging on to past glory and power literally since the turn of the century. Economic numbers have been grossly fudged; our news has been massaged, altered and even hidden from us. It's as if "if we don't see it or know it...it mustn't be." The reality is that the rest of the world sees it and knows it; the reality is that wealth and power are shifting and changing hands. I believe that if you see this, understand it and know it, you can at least attempt to protect yourself from what is coming. The timing of your "personal economics and finances" will be directly affected by decisions that are being made in Russia and China. This was not the case 20 years ago, unfortunately it is today. If you ignore the current geopolitics, I believe that you do so at your own (and your family's risk).
I plan either for Monday or later in the week to write about a "stockbroker" that I recently met. He was a very nice guy... but oblivious and I believe "representative" of why doing your own homework and why geopolitics is so important to truly understand. Until next week I will leave you with this thought, he asked me, "But everything is doing so well, how can what you are telling me be true?"