Investing in a Changing World
What is different this time is the globalization of the supply chain . . . is now unraveling at the same time the forty-year era of declining interest rates from 1981 to 2021 appears to be over.
There is no escaping the fact that the American-led post-WWII “rules-based international order” is in disarray, leading many to believe that a new “multi-polar world” has emerged. To my mind, the situation is best summed up like this,
Can a single international order be legally binding for every state? The alternative to world order is not multipolarity, but a Hobbesian system defined by the aggression of the strong and the ruthless subjugation of the weak. Multipolarity suggests that there are now multiple contenders capable of shaping the world order, fostering legitimacy and consensus and maintaining that order in the face of disruption or defiance.
When I wrote How the Bond Market Ends five years ago, the economic system as we knew it since the 1980s was already strained. The pandemic brought events forward even more, followed by the invasion of Ukraine, shifting alliances in such a way that we now think in terms of “axis” again: The West (Five Eyes countries, Japan, Western Europe), The East (China, Russia, Iran, North Korea), and The Rest (countries maximizing self-interest).