There is usually something significant happening in the world somewhere, but it’s highly unusual that something big is happening almost everywhere.
If you are like me, you are probably convinced that it is no coincidence and that all these events must be connected in some way.
As I sat on a Parisian patio, the news broke that President Trump will be escalating the ‘tariff war’ with Canada and referred to Prime Minister Justin Trudeau as “very dishonest and weak.”
I don’t recall the US-Canadian relations being this strained, ever.
And this seems to be just the opening salvo.
The Donald tweeted these words upon arriving in Singapore for a historical meeting with Kim, the Rocket Boy, from North Korea. And Kim almost never meets with anybody – during his reign he went to China twice and recently met with his counterpart from South Korea, that’s it.
Why, all of a sudden, is he now open to meet with his biggest adversary is a question worth asking.
As always, the “why” is what is most interesting.
One reason may be climate change – as the temperatures drop, food production will be affected. North Korea had devastating crop failures in the mid 1980s and again in late 1990s, which caused the death of about 2 -3 million people from starvation and hunger related illnesses. Kim Jong-un may be afraid that he will not be able to hold to power should that happen again.
But there is another aspect of this historical meeting in Singapore – it is the US’s gamble to put pressure on China. Should the Koreas unite under some scenario, the Chinese will have the American army on their border.
They were historically supporting North Korea to avoid exactly that.
Just like in our homes, it’s better to have a noisy little dog at the door than an aggressive stranger.
The stakes are extremely high and in this light it is rather obvious why Trump reacted so sharply to the Trudeau criticism (the Canadian prime minister called the tariffs “insulting” repeatedly). The American president must negotiate with Kim from a position of strength, and so the young Trudeau picked a terrible moment for his actions. It just shows who is a businessman and master negotiator and who is a leftist politician.
Moving on to Europe – the huge development here is the coming tampering of bond purchases (both, government and corporate) by the European Central Bank under Mario Draghi.
To be clear, the ECB is by far the biggest buyer of these papers, and if they even slow down where will the bid come from? Big money knows that, of course, and capital outflows from the core Europe have been intensifying.
In addition to money being parked in the US, there are reports of increased outflows to Scandinavian countries and even to Easter Europe, mainly Hungry and Poland.
The German Bunds are still flying high, but this is simply a bet that if the Euro fails, investors will end up with Deutsch Marks.
To end on a lighter note – on Sunday, the Swiss rejected a referendum to return to “Vollgeld”, which would mean the end of fractional reserve banking, the current modus operandi of the finance system worldwide.
It is not just. If a private person handled money the way the banks do, he or she would go to jail. So it’s not a surprise that a logical Swiss mind has a problem with it.
Anyways, the Vollgeld idea fell.
Weiter wie bisher.
Tom Kubiak is the author of The Traveler