Entry 11 – War (second phase)

I begin this entry 11 with many doubts about which news to put at the beginning of the entry (in the new context part), and which to put at the end (in the recommended links part). I say this because many important things have happened, but few of them are totally substantial. That is to say, we are in transition moments of this War.

I’ll do my best, but I recommend getting to see what I put at the end.

Before starting with the entry, I want to say that the earthquake in Turkey and Syria has occurred. It is not something related to the war (which is the objective of these entries), but it is something very sad, which generates a lot of suffering. It reminds us how fragile we are as individuals, and how fragile are our structures, physical (buildings) and social (governments). The saddest thing I have seen these days, and related to the War, is that there are problems for rescue teams, and emergency supplies, to reach some places affected by the earthquake because of the prohibitions generated by the War. Yuck.

My new context selection.

Recent news stories I have selected to think about contextual changes are:

The last Davos meeting is over. What is significant is that Russia did not attend, and that its friendly countries (China, and many others), participated tangentially, only with the aim of saying that they do not share the objectives of a unipolar world based on the rules of the West. In other words, Davos has become the economic summit of “part of the world”, not that of “the whole world”. News here, among many other sites.

Although it is also true that Russia has long been moving away from Davos and holding the St. Petersburg international economic forum as an alternative.

There has been a crisis over corruption of Ukrainian ministers. These are things that happen from time to time. Moreover, the Ukrainian government has always been suspected of such activities (it is still one of Russia’s most important accusations against them). Of course, the timing for that is very inopportune. News here.

If we already said in the previous entry 10 that the helicopter accident? of one of its ministers was a problem for Ukraine, this complicates it even more. Are the people who lead Ukrainians to death and ruin, and ask for world help, really reliable? There is a lot to think about here.

Israel has decided not to explicitly support Ukraine. This is strange, knowing that, theoretically, Israel and Ukraine belong to the West, as well as that Zelenski is, together with Netanyahu, the only Jewish world leader. But it is less strange when Zelenski has not supported Israel in UN votes on its actions in Palestine.

The fact is that Israel, after Netanyahu’s new right-wing government, is taking subtle steps in favor of Putin. Very curious. Maybe they know who is going to win this battle. News here.

Ukraine asks for tanks and planes.

In the end, Germany, despite the reluctance I mentioned in the previous entry 10, has agreed to send its Leopard 2 tanks to Ukraine. It has done so on condition that the USA also sends its tanks (Abrams m1). News here. Of course, it seems that the delivery will be very slow, based on the arguments that the tanks need to be repaired and overhauled, as well as that Ukrainian soldiers need to be trained in their use. Maybe this is a theater to say that they do support, but to try to make the war end before they have to send them for real.

After that, Ukraine says it does not think it is enough, and also asks for fighter jets. News here. It is logical that the invaded country asks for what it thinks it needs, but it is also logical that the countries that help it end up getting bored that none of their aid is enough. We will see …

On this issue, Zerohedge, which is a media outlet sympathetic to the extreme wing of the Republican party, suggests that Biden’s decision to bring in the tanks (and to convince/pressure Germany) may be due to threats from Zelensky to make public a report on Biden’s family’s economic relations with Russia and China. If true, that report would do a lot of damage to Biden. You can see the news story here. And, whether that report is true or not, what is clear is that the US willingness to support Ukraine is far from unanimous.

In any case, whatever weapons Ukraine has, what must be ruled out is the fall of Russia. I say this because China will not allow it. I have already commented in previous notes that it may be in China’s interest that Russia weakens a little (so that it has less power in its bloc of countries), but it will not accept that it loses the war and is “conquered” by the West (something almost impossible), nor that its government falls and enters into near anarchy (not so impossible). China cannot accept that, because it needs Russia to remain its reliable supplier of fossil energy and agricultural grain, as we have seen in previous entries.

If China sees Russia’s extreme weakness in the war, it will help it to the extent necessary, either with weapons or with money. And, if that happens, the West will have serious problems.

Given the situation, it seems that the only (and no small) issue to be resolved is whether Russia keeps any part of Ukraine, or not. As well as how to explain the agreements to the world.

I comment here a hypothesis that Fernando del Pino tells in a link that I put at the end of the entry, which makes you think. He says that a solution to the war would be a coup d’état in Ukraine, after which the new government would say that they cannot stand any more suffering of the people, that they surrender, and that they let Russia keep the part of Ukraine that has always been mostly pro-Russian. Thus, Ukraine stops asking for help, and NATO does not have to say that it has lost; Russia and China are satisfied, because they have demonstrated their power; and what is left of Ukraine moves closer to the West, which takes it upon itself to help in its repair. Will something similar happen? If it happens, it will be almost the same as Putin sought from the beginning, and it may generate civil war in Ukraine.

The alternatives of adaptation of people.

In the previous entry 7, I described the main features of the new world order, as well as the issues that companies must consider in order to adapt to these new times.

I will now try to look a little bit at the adaptation alternatives for individual persons.

Of course, the situation will be very different depending on the situation of each person, i.e. their country, their age, their education, their wealth, their desires, …

Before trying to sort out these alternatives, I would like to make the comment that I am encountering many people in my day-to-day life who are adopting the ostrich technique, that of not wanting to see that the world is changing. That will cause them to lose time in adapting.

The foreseeable future.

As a reminder of everything I have written, I recommend rereading the summary I made in entry 7 about the future I believe the world is heading towards. I do so because I consider it basic for making our personal decisions.

The central idea is that the world is going to change a lot, in a once-in-a-century (or longer) kind of way. It will have nothing to do with what we know.

For anyone who doesn’t want to spend time looking at that entry 7, the most central idea stated there is:

The middle classes of the West will drop in quality of life, while the lower classes of the world close to China will become lower-middle classes. That will be the convergence, and when it is reached, the Global Order can be sought and decided who leads it.

This means that the social order in the West will be very altered, due to the anger of its population losing quality of life, while the opposite will occur in the other bloc.

While this moment of social convergence of the blocks is coming, due to technological advances and environmental needs, there will be:

- An energy transition (slower than people assume, because it is necessary to create a lot of expensive infrastructure).
- A disappearance of fiat currencies ($, €, …).
- A financial crisis, with public debt defaults and bankruptcy of conventional banking. There will be a return of power to those who produce “things”.
- An automation of almost everything. With a lot of artificial intelligence, in addition to robotization. Subject that will lead to the elimination of almost all “routine” jobs, whether factory or office. What will be important will be creativity, the ability to interpret data, …

The questions we have to ask ourselves

Faced with the future situation described above, in order to make our personal adaptation decisions, each of us has to ask ourselves several questions, always depending on our age, our country, our ambitions and likes, our economic situation, …

The answer to these questions will determine the type of decisions we will each need to make to adapt to the new times.

A first approach I can think of to these questions is the following, always conditioned by the personal circumstances of each individual:

Is it convenient for me to change the country I live on (basically, the bloc of countries)? I can even think of choosing one of the few countries that end up being almost neutral (which will be those from which the scarce communication between blocks will be done, …, and the mafia business, which are profitable, but dangerous).

For those who decide that the answer is yes, it will be easier to do, and more advisable, if they are young people with few roots (family, patrimony to defend, …).

Those who choose to stay in the West must accept that life is going to be increasingly difficult and uncomfortable. That said, it is going to be statistically so. There will always be exceptions (but it is not pleasant to live well in a place where there is a lot of suffering).

Given my job position, is it in my best interest to stay in the job I do?

In view of this, we must remember that changes will take time. Therefore, if we have little working life left, it may be acceptable to stay (we may not be laid off before retirement).

On the contrary, if we have a lot of time left, we have to analyze whether the company or sector we are in is one of those that will go bankrupt due to technological change or block geopolitics. If so, the sooner we jump off the sinking ship, the better (even if we don’t move to another country, we may have to change jobs).

Given my background and skills, is it useful for the world that will be generated by the technological revolution?

If the answer is no, and we are young enough, we should think about learning other things with a better future.

Thinking about my savings and wealth, I must analyze if I have them in any place, or asset, that has a high risk of losing value (or of the bank failing, or of the asset being confiscated, …) due to the financial crisis and the change in the world structure.

If the answer is yes, I should get out of those investments as soon as possible, and look for other places to invest those savings. Everyone will have their own theories. Mine is that one should get out of everything related to the current financial world, and be more related to the direct ownership of “things”, especially if they are useful things for most people.

Once we have the answers to these questions for our personal situation, it is time to develop the implementation strategy. This will be something particularized to each case.

Here the time factor and the priorities factor have a great influence. I say that because there may be incompatibility in the answers to the questions, and this incompatibility will have to be resolved. Let me give you an example: let’s imagine that I have decided that I do want to move to another country, and I also want to change the way I have invested my savings, but I have realized that divesting my savings will take me a long time. In that case, I have to see if I can manage the work of that savings divestment from the new country, or if I should stay in the old one until the divestment is finished.

The rower is incompetent.

After what has been said, it is clear to all of us that we are faced with tough decisions in difficult times.

In those moments, one of the most important things is not to lose your clarity of ideas, … or your sense of humor.

We must avoid letting ourselves be carried away by stupid inertias, and by well-decorated customs.

That is why I think it is appropriate to put here the old joke about the rower, which many of you may know. The full text of that joke is here (I highly recommend reading it, to have a good time, and to think if we are not making the same mistake with much more serious things). The moral is clear: less nonsense about consultant analysis when it does not apply, and more about getting to the heart of the problem.

There is another old graphic joke that I always liked. It refers to communication problems between teams on a project. It is the one about the design of the swing (here). The moral is that you know what you want, but you don’t know what is going to be done after many people’s opinions. Same thing: less opinions and more action.

I have told these old jokes because they have come to my mind with recent Spanish news. It turns out that contracts for hundreds of millions of euros in trains have had to be delayed for years because the measurements of the trains given to the contractors do not allow those trains to fit in the actual existing tunnels. Shame on those of us who are engineers. It seems that no one did their checks.

Unfortunately, these things happen more often than expected. There has already been a NASA shuttle accident because an engineer interpreted the measurements on the plans as being in inches, when they were in centimeters.

Readings that have interested me.

In the process of writing this entry I have come across the following issues that have caught my attention. Some of them are related to what has been discussed in this entry, and others are not, but I recommend that you check them out.

Central banks have bought more gold in 2022 than in all recent history. This is analyzed by Daniel Lacalle in this article. He says that the balance sheets of central banks are very bad and that a strong loss of value of currencies is expected (nothing new). What is new is the movement towards gold, which may mean that central banks see the time when the bubble bursts is near.

Related to the same issue, the people at Zerohedge have published an article (this one), where they talk about what they call the economic death spiral. The most interesting thing is the last graph they put in the article. There they compare the real interest rate with the theoretical interest rate at which everything collected by the US in taxes would have to be destined to the payment of interest on the debt. The result is that they are very close. Maybe soon the USA will not be able to do anything but pay the debt, and will have no money at all to pay for police, roads, health care, …, unless it goes further into debt, which is becoming increasingly difficult.

Here they defend the thesis that this war is the first digital war in history. Therefore, the collaboration of large technology companies with the military is very necessary.

This is yet another way of recognizing the growing power of these companies.

The USA has made the first shipment to Ukraine of money seized from Russian oligarchs (news here). It may sound logical, but it is clear that no person or government afraid of being considered an enemy of the USA will ever again have their funds deposited in the world close to the USA.

Bad for the dollar and for Western banks.

Fernando del Pino makes a lucid analysis of what has happened and will happen in the war in this article (thanks, Tito, for sending it to me). He is clear that Russia will win, that Europe will be the big loser, and that we are being deceived by the news.

Manuel Pimentel makes here a good summary of what is happening after the war in the Spanish countryside. Urban and agricultural society do not understand each other, and prices will continue to rise as long as we make life more difficult for the countryside.

Ray Dalio has written again. Although it is a bit long, it is almost obligatory to read him. He comes to say that he sees the long wave cycle change (paradigm shift) very close. For those who don’t want reading it, I will summarize it in that he says that there is a likelihood of civil war in the USA, as well as escalation to full scale international war. He also says that, for a long time, GPD growth will be lower than desired, inflation will be higher than desired, and returns on most investments will be lower than desired. It can be read here.

In terms of artificial intelligence, the move Microsoft has made is quite important. Perhaps it will take power away from Google in the search engine world, which means taking away the source of advertising funding. If that happens, in addition to problems for Google, it means changes in global advertising (it’s not clear which way). In addition, we will all have to learn to use technology differently in our lives. Ignacio de Gregorio tells it well here.

There is an interesting report on the state of development of official cryptocurrencies (CBDC) in each country. It can be seen here. The summary is that it is becoming more and more advanced in more countries. It is an unstoppable trend.

This is as far as I have come for today, … and for this string of entries.

I have decided that, on the almost anniversary of the start of the War, and after having analyzed what I considered, I must close the cycle.

I hope to start a new chain of entries soon. I also hope that circumstances will allow that chain to be oriented to the construction of the new world, because I hope that the stage of destruction of the old one will be over (or very soon).

Thanks to all of you who have read me, and to those of you who have given me ideas and information.