2 Weeks in the Rear View
A quick recap of everything that happened recently
Boy … the last 2 weeks have been … busy.
To make it harder, I am still recovering from a surgery done 3 weeks ago, and I am far from being able to work at full speed.
So I wanted to do a quick news recap.
My apologies for the lack of more elaborate content this week and probably the next.
I will get back with more reports and market + geopol comments in April.
Falling Trust in the West
In a previous article, I highlighted how the credibility of Western diplomacy was durably damaged by recent actions.
Well, I guess so is the credibility of Western finance, banks and the rule of law falling apart.
Credit Suisse was “saved” thanks to rewriting the national law over the weekend when markets were closed. Wiping out bondholders in the process, but not shareholders.
Below is a tweet by a market commentator whose name I will leave the out.
(Not to be taken as a personal attack. Even if considering a year ago he was very smug about “you deserve to lose money if you invest in a dictatorship like Russia”, so this is somewhat funny.)
He had invested in Credit Suisse bonds and expected to be more protected than shareholders, a rule that bondholders expect to be applied automatically for a few centuries by now.
Well … not anymore apparently. Truly a banana republic behavior to re-write laws over the weekend.
And in Switzerland, the center of Western “safe banking” of all places.
This puts into question the value of ALL bonds of ALL European and Western banks. Maybe even other corporate bonds as well.
I said it before and I will say it again. Western jurisdictions are not safer (nor worse) than most emerging markets. Both might steal your money overnight with the stroke of a legislative pen.
Especially when hundreds of billions worth of deposits are “suddenly” at risk because Western government bonds have lost so much value.
To quote myself:
“So the key idea is to get paid fairly for the risk.”
Do you prefer Credit Suisse bonds at 9-10% yields?
Or Petrobras at 40-70% dividend yields?
None are 100% safe. But one pays you for your risk.
Meanwhile, the world’s financial system keeps de-westernizing. A big threat to many “safe” monopoles like Visa & Mastercard:
273 million people with their own card payment system, out of Western controlled companies … just like that…
![Twitter avatar for @YinZP365](https://substackcdn.com/image/twitter_name/w_96/YinZP365.jpg)
Diplomatic Over-Activity
So many international relations headlines that it was dizzying to follow them all. Especially in the midst of a banking crisis.
So here’s the recap of what you might have missed.
Russia-China
The biggest event is certainly Xi Jinping's visit to Putin.
They are closer than ever.
The New York Times on Tuesday said Russia had purchased more than $US12 million ($17 million) in drones and drone parts from China in the year since the invasion began
Other Russia
ICC issues war crimes arrest warrant for Putin for alleged deportation of Ukrainian children
Africa
A ‘New Cold War’ Looms in Africa as U.S. Pushes Against Russian Gains. The U.S. is reprising its playbook in Ukraine, where it has used classified information to expose plans by Russia. Next target: Chad.
Moscow wrote off more than $20B in debts from African states
Middle East
Peace in our time?
Saudi Arabia invited Iran's President Raisi to visit, Tehran says
Syria's Assad arrives in United Arab Emirates in official visit
Saudi Arabia, Syria to reopen embassies after kingdom restores ties with Iran: report
Or not?
US senators introduce bipartisan resolution to establish report on Saudi Arabia human rights record
China
A new diplomatic initiative that will certainly be appealing to the Muslim world, and other “conservative” cultures:
Xi proposes Global Civilization Initiative, stressing inclusiveness.
ASEAN & Australia
Australian nuclear submarine program to cost up to $368b as AUKUS details unveiled in the US
So is Indonesia, “expecting” Australia to respect the previous treaties about nuclear nonproliferation. Stuck between China and Australia, Indonesia seems unhappy of turning into a potential battlefield. Can’t blame them.
Will pushing nuclear weapons in the region turn the ASEAN (667 million people) against the USA?
China-USA relations
Meanwhile, the trade war and diplomatic sparring between the 2 world leaders are intensifying.
TikTok CEO in the hot seat: 5 takeaways from his first appearance before Congress
TikTok CEO stresses its practices are no different than US tech giants
Energy crisis 2.0
And just as a reminder that the energy crisis is not over.
Germany risks running out of gas next winter, regulator warns
The true cost of Europe's gas reserves at an all-time high is sucking out all the LNG from poorer economies:
Bangladesh Utilities Seek $1 Billion for Fuel to Avert Blackouts
IMF does surgical strike on Cash-Straped Pakistan; sets fresh tough conditions to secure Bailout.
Abandoning Long-Range Nuclear Missile Programme.
Cut of 15% in defense budget.
Third-party audit of Chinese loans and CPEC investments.
Bridging financing gap from friendly countries.
Assurance of political stability from opposition leaders.
Meanwhile in France
As a conclusion, I cannot miss a chance to poke fun at my fellow French citizens, watching it from afar in Estonia.
The protests about a pension reform adding TWO ENTIRE YEARS (oh my … the horror!) to the age of retirement are turning …hot…
I am sure king Charles will appreciate the “warm” welcome to Bordeaux.