The Davos Man Can Suck it
This is the worst week in the financial year, by far. This is the week where the high and mighty, the self serving elite together with their groupies gather in Davos, Switzerland. They drink champagne, eat bonbons and form committees to tell the rest of us how to live.
They show up on Bloomberg and MSNBC to pontificate to the TV screens. They fly in on their G6s burning up enough carbon to last you a lifetime, and then tell us we should eat bugs because cows fart too much.
They are men who were born into a class of wealth and power and tell us that we are racist. They espouse free trade on the one hand while they seek monopolies with the other – rent seekers to the last.
This year, the Davos theme is “rebuilding trust”. Good luck with that. You’re going to need a better post-covid defibrillator. The Davos platform of free trade, anti-poverty and climate change is shot all to hell and a ski lift full of NGOs isn’t going to change it.
Trade between China and the U.S. has dropped so much that Mexico is America’s leading trade partner. According to the World Bank global trade growth in 2024 is expected to be only half the average in the decade before the pandemic.
And given the Houthis blowing up cargo ships in the Red Sea, the cost of shipping goods will be much higher as vessels take Bartolomeu Dias’ route around the Cape of Good Hope.
The U.S. Navy Cares
The U.S. Navy protects world trade by keeping the sea lanes open. This has been part of its mission statement since the end of WWII. It was part of a bargain with the free world. The U.S. would ensure free trade as long as you sided against the Soviet Union and used the U.S. dollar.
But there is no more Soviet Union and many countries are moving away from the dollar. It begs the question of why the U.S. Navy is protecting Chinese ships in the Gulf of Aden.
After all, U.S. global trade is about 23% of GDP and the majority of that trade is with Mexico and Canada. This means we really don’t need the rest of the world. And on top of that the Red Sea connects Europe and Asia. I hardly use it.
And now that the U.S. is a net exporter of hydrocarbon products there is really no reason to care about the Middle East at all. Much less Saudi Arabia and the endless Sunni/Shia wars.
Which is why the Houthis with the backing of Iran, Russia and China are pressing the point. If push comes to shove how much will the American public be willing to sacrifice in an election year with a soft President?
Not that much is my guess. The only thing keeping us there is inertia.
But back to the point. It’s not about the Davos man regaining the world’s trust. It’s about his competence.
Walter Mead in the WSJ writes:
This isn’t, at its core, a crisis of trust. It is a crisis of competence. Why would voters expect an “expert class” that was so wrong for so long about Russia, China, Iran and Covid to know how to cope with a challenge as difficult and multifaceted as the energy transition? Why would they trust European and American politicians who are failing so woefully to handle massive illegal migration to manage the rise of artificial intelligence?
The elites can’t manage anything beyond getting elected. Moreover they don’t even try. One could argue that they like the way things are heading. Here’s hoping our AI overlords will be better.
All the best,
Pro Trader Today