New World Disorder

A new world disorder is unfolding, the latest being Hamas incursion into Israel with fatalities exceeding one thousand, including hostages. The severity of the attack has not been seen since the Yom Kippur War, the 1973 Arab-Israeli war. Hamas, an Islamic fundamentalist that does not recognise Israel’s right to exist, fired thousands of rockets, with well-armed fighters, explosive-laden drones, and skilful paragliders, and managed to kidnap an Israeli General. 

The scope and scale of the Hamas attack suggest it was a premeditated planned military operation that required finance, training, and equipment and was likely state-sponsored. 

New world disorder and newfound powers of rebels 

Post WW2 World Order, where the hegemon, dominant global power, influences international laws, and trade treaties, is unravelling and giving way to a new world disorder. 

The waning economic and geopolitical influence of the current US hegemony is and will likely continue to result in unexpected regional conflicts in all corners of the world.

As Darren Winters explains, an Empire in a twilight zone leads to a global power vacuum, geopolitical instability and uncertainty, and a new world disorder.   

“A Hamas spokesperson earlier told the BBC that the militant group had backing from its ally, Iran, for its surprise attacks on Israel, saying it was a source of pride.”

In Iran, Members of the Tehran parliament shouted Death to Israel. 

The United Nations, part of the old world order, is not even a talking shop in this new world disorder

new world disorder

At The UN General Assembly on November 29, 1947, 33 countries voted in favour, 13 countries against, and 10 countries voted for the state of Israel to exist as an independent state. 

Moreover, a majority of countries in the UN General Assembly voted against Russia’s invasion of Ukraine. 

On October 22, a two-thirds majority adopted the resolution with 143 countries voting in favour against, 5 voting against and 35 abstaining against Russia’s invasion of the Ukraine.   

The world order cycle has moved into a new world disorder where might is right. The Emperor is perceived to have no clothes, unable, or no longer willing to enforce the rules of the game. Maybe it started with the US withdrawal from Afghanistan. Perhaps the US hegemony is tired of being the global cop.  

So with the global enforcer now perceived to be unwilling or unable to enforce the rules of the game, we are seeing the rise of rival powers challenging the throne and a global disorder.

Expect the unexpected in this new world disorder 

The UN has become irrelevant. Every flash point that played out in the immediate post-WW2 world order period could flare up in this new world disorder. What next?

Israel and Iran, India and Pakistan, China and Taiwan, US and North Korea, Nigeria and France, the UK and Argentina, India and China are just a few ongoing flare ups that could ignite. 

Anything could come out of left field in this new world disorder

We could even see civil conflict within nations. Spain and Catalonia, England, Ireland, and Scotland.  

Principles for Dealing with the Changing World Order by Ray Dalio explains best the current state of play.

“Over my roughly 50 years of global macro investing. I have learned the hard way that the most important events that surprise me did so because they never happened in my lifetime,” Ray Dalio.

Ray Dalio learned to anticipate the future by studying the past. 

In other words, an event may not have happened in our relatively short lifespan, but a version of that event happened sometime in history. 

“History doesn’t repeat itself, but it often rhymes,” Mark Twain. 

If the ancient Roman Emperor Nero had nukes, would he have used them as the Roman Empire collapsed into a new world disorder?

The Roman Empire saw several decades of peace and prosperity spanning their continents. The fall of Rome, was the loss of central political control in the Western Roman Empire, a process in which the Empire failed to enforce its rule.

Moreover, Hyperinflation, soaring taxes, and worthless money created a trifecta that dissolved much of Rome’s trade.

Historians believe that Emperor Nero was responsible for burning his capital city as he saw the demise of his Empire and watched Rome burn. Nero wanted to build new palaces from the ruins.    

There are many similarities between the ancient Roman Empire and the US Empire of today. 

Are Western puppet masters modern versions of Neros as the hegemon and its satellites walk steadily along a MAD footing with Russia? 

Investing in a new world disorder 

The current investment climate has been the most difficult for investors ever. Investors who bought 30-year treasury bonds in August 2020 when yields were approximately 1% are seeing market-to-market losses on their treasury portfolio of nearly 40%, which is unprecedented. Not even during the Great Depression did investors lose so much money on long-maturity treasuries.

But treasuries, US paper are perceived as a safe haven asset, a structural pillar supporting the Western system of finance and investing. So, instability in the treasury market is creating shockwaves throughout the global system of finance.

The current war in Israel is causing oil to spike.     

Typically, investing in a  new world disorder is bullish for the USD and treasuries as investors flock to safe-haven assets and the reserve currency

But the graveyard of history is littered with former Empires from a bygone era, and could the US be a modern version of such? 

Ancient Rome’s denarius aureus became worthless along with the currency of many other former empires. 

Is the current US hegemony different, and will it give up the throne without a fight?

If you know the answer to the above, then you have a heads-up on how to invest.  

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