Wednesday, March 19, 2014

Daily Briefing for Wednesday, March 19, 2014

Stop Worrying About "The" Event...Prepare for "Any" Event.

No doubt you were shocked like me to read the latest report from NASA to hear that the collapse of American society is inevitable, if not soon.  From their report:

"Collapse can be avoided, and population can reach a steady state at the maximum carrying capacity, if the rate of depletion of nature is reduced to a sustainable level, and if resources are distributed equitably."

Yes, I was shocked by this.  Not by the predictable conclusions that the cure for what ails us includes sentencing everyone to drive Toyota Priuses for life and redistributing wealth from the evil rich to those who think lottery tickets are a sound financial investment.  What shocked me was the agency issuing the report:  the National Aeronautics and Space Administration.  The agency previously devoted to kicking ass by putting Americans on the moon and running the Space Shuttle program has been relegated to writing reports on Mathusian theory. 

I shouldn't be surprised.  Yet I am.  Just like Charlie Brown is every time he tries to kick the football.

Yet surprises don't come to me as often as they used to.  I suspect that's a function of getting older and/or becoming more cynical about the affairs of the world.  It may also be a function of realizing that the Team Red/Team Blue paradigm is more than a distraction than a meaningful juxtaposition of opposing political theories.

And so when I heard this story - which apparently I missed when it came out eight months ago - that Russia approached China about running a coordinated financial attack against the United States during the Great Recession, I wasn't surprised at all. 

Don't be fooled into thinking this isn't a big deal.  According to the BBC (and since reporters at the BBC sound like those actors in Downton Abbey or whatever that cheap knock off of Melrose Place is called, they must be telling the truth):

Now this is where we enter the territory of a geopolitical thriller. Mr Paulson:

"Here I'm not going to name the senior person, but I was meeting with someone… This person told me that the Chinese had received a message from the Russians which was, 'Hey let's join together and sell Fannie and Freddie securities on the market.' The Chinese weren't going to do that but again, it just, it just drove home to me how vulnerable I felt until we had put Fannie and Freddie into conservatorship [the rescue plan for them, that was eventually put in place]."

For me this is pretty jaw-dropping stuff - the Chinese told Hank Paulson that the Russians were suggesting a joint pact with China to drive down the price of the debt of Fannie and Freddie, and maximize the turmoil on Wall Street - presumably with a view to maximizing the cost of the rescue for Washington and further damaging its financial health.

The ramifications for the United States of such a plan during a period of already great economic distress would have been dramatic to say the least.  Fortunately for us, oddly enough, the Chinese own so much of our debt they didn't want to risk losing that much money.

Fast forward to this week.  CNN is breathlessly tracking down the Malaysian Airliner that may or may not be in the ocean.  (I'm inclined to believe the plane was hijacked...and unless the plane is at the bottom of the ocean, some terrorist group just got a new toy to play with.) Meanwhile, Russia is fast tracking its plans to annex Crimea, gleefully taunting the United States in the process.

What does it all mean?  Will Russia's incursion trigger World War III?  I doubt it.  Then again, history shows that wars in that region do get triggered over events like this.  Just because it's not logical doesn't mean it won't happen.

And even if it doesn't trigger what we normally think of as a World War III conflagration, it could trigger many other problems which we might experience here in the United States.  This might include more financial attacks like the one contemplated by the Russians just a few years ago. 

From time to time, I'm asked what "the" event will be that will trigger the need to rely upon our preparations.  And I think that's short sighted.  The event may be something relatively benign - like a tornado outbreak (benign in the relative compared to a long term regional emergency), or it could be ramifications from an international geopolitical event.  I encourage you not to get fixated on one particular peril, lest it not come to fruition.  Prepare for a wide spectrum of perils instead.  Focus on the "any event possible" possibility to ensure you are in fact prepared for any event.