The End Of The “New World Order?”
by David Reavill
Imagine if leaders representing nearly half the world’s population were to meet, and it didn’t make the nightly news. Very little has been reported in the Western Press about the latest meeting of the Shanghai Cooperation Organization, which met this week.
Consider the Shanghai Cooperation Organization to be the NATO of Asia. For 23 years, the SCO has brought together leaders from the other side of the world to provide economic and political cooperation and support. Vladimir Putin and Xi Jinping were there, respectfully representing Russia and China. Also attending were leaders from India, Kazakhstan, Kyrgyzstan, and Tajikistan. Also in attendance were delegates from Iran and Belarus, who have asked to join the organization.
The SCO is a vibrant and powerful organization that will grow all the more influential, especially now with the addition of Iran from the Middle East. I found these leaders’ different perspectives on world events most interesting. We would do well to pay close attention to their actions.
As a Westerner, I would have expected that anytime Vladimir Putin was in the room, that topic number one would be Ukraine. General Secretary Xi did raise the issue, but Putin assured him that he would keep him up to date as the Special Military Operation proceeds.
As far as Xi was concerned, issue number one was the provocations from the United States over Taiwan. According to Russian news sources, Xi believes the United States is about to renege on our earlier agreements about Taiwan. The trip to Taiwan by Speaker of the House Nancy Pelosi did not go over well and still chaffed the Chinese. It was an event forgotten by many here in America, but rest assured, it is top of the stack for Xi.
It was at this point that the meeting came into focus. President Putin, while never mentioning the United States or the European Union, referred instead to the collective West. The President said, and I quote: The West’s “attempts to create a unipolar world have recently taken on an absolutely ugly shape and are absolutely unacceptable to the vast majority of nations on the planet.”
Of course, these comments are a reaction to the sanctions and breached trade agreements between the collective West and Russia. Putin sees the recent actions of the United States and Europe as an effort to promote a unipolar world.
And he was far from alone in this assessment. The Deputy Secretary General of the SCO, Sohail Khan, delivered an address entitled: “Economic Wars as a Weapon for the Suppression of Sovereignty.”
This speech was also a reaction to the recent sanctions on Russia by the West.
Many in this country view sanctions as the lesser, more humane approach to this conflict. But the SCO and Professor Khan see sanctions as a vital, life and death proposition. We need to recognize their view.
It is also equally important that we appreciate these countries’ profound economic impact. They have effectively blunted every economic sanction that the Biden Administration has imposed.
Biden first banned them from SWIFT, the international settlements system. With China in the lead, they almost took their transactions off SWIFT. And now use the Chinese-based CIPS System.
When the US and most of Europe banned importing Russian oil, they traded among themselves—bypassing the old order. And as we noted last week, Gazprom, Russia’s largest oil and gas exporter, reported record earnings, double the year before.
When President Biden rails against Russia, and its war in Ukraine, the Shanghai Cooperation Countries, hear it as an attack against them. They perceive the more significant threat to be the United States.
By all accounts, they are as opposed to the American-centric, “Unipolar” world as Vladimir Putin. And while American Presidents since George H.W. Bush have extolled the virtues of a “New World Order,” that will be extraordinarily difficult to achieve with half the world opposed.
Realtors always say it’s “location, location, location.” And that certainly applies to today’s Real Estate Report coming out of China. Nationwide Real Estate Prices look headed toward a recession, as their monthly survey of 70 Cities in China was down by 1.3% in August, for the fourth month in a row, and the most significant decline in 7 years. However, two major Chinese cities, Beijing and Shanghai, are bucking that trend. Prices in those two cities were up last month. Perhaps there is something to that old “location” thing, even in China.
A Reality check came from Federal Express last night. In a special pre-earnings statement, the CEO of FED EX, Raj Subramanian, reported that worldwide shipping is down dramatically. Indicating that he’s very disappointed in their results, Subramaninian called out the fragile Macro numbers, especially in Asia and Europe. Could the recession be directly ahead?
Speaking of dismal economic numbers, the European Union has just reported the worst inflation ever. Their annual inflation rate is now 9.1%.
As you know, there’s been a universal reaction to this global inflation. Central Banks have been raising interest rates to quell these runaway prices. However, there is at least one country that is bucking that trend. The Russian Central Bank just lowered its core interest rate by half a percent, the sixth reduction in interest for Russia this year. You may recall that in March, the bank raised interest in Russia to 20%. And that seemed to do the trick. Inflation in Russia is declining.
Turning to the US, shortly, we will get the first preliminary reading on the Michigan Survey of consumer sentiment. Analysts expect a slight boost in consumer outlook in this survey.
No earnings reports this morning. But Huntsman Corporation, an organic chemical company, has provided forward guidance, just like Fed Ex, and traders promptly dropped the stock price. It will be interesting to see how many companies follow Fed Ex’s lead in providing extraordinary guidance.