Puzzles, Checkers and The Game of Go

The week ended on January 9, 2026, interesting news items to look at from the past week are:

1. Puzzles, Checkers and The Game of Go: In our last Blog we used 4 chess-type board games to represent the level of sophistication and thinking of officials that are running major nations. We like to take the analogy a step further to examine the US invasion of Venezuela, the kidnap of President Maduro and the piracy of oil tankers in international waters. No one of course has complete information on the incidents. By no one, I mean from all person of interest be they from US, Israel, Venezuela, China, Russia and nations in the Western alliance and the Global South. The incidents of course has catastrophic global consequences and we all need to take time to gather the missing pieces of this puzzle of “Pirates of the Caribbean” and to prepare for its fallout. (Fig. 1).

(i) Immediate Known Reaction of Consequence: (a) 5 Senate Republicans jumped ship and voted with the Democrats to advance a bill to check Trump’s power for further military action against Venezuela unless with Congressional Approval. (Fig. 2).

In a recent interview with the NY Times, Trump boasted the only thing which can stop him is "My own morality. My own mind", indicating a belief that he is not bound by international law or other external legal constraints when making decisions as president. (Fig. 3)

(b)  Trump has committed “aggression crime,” founding International Criminal Court prosecutor says (Fig. 4).

(c) “Era of lawlessness”: UN blasts Trump over Venezuelan raids (Fig. 5)

(d) '‘Uninvestable’: Trump pitch to oil execs yields no promises (Fig. 6)

(e) Protesters Worldwide Condemn U.S. Assault on Venezuela - Cities include  Chicago, Dallas, Los Angeles, New York, Philadelphia, Pittsburgh, San Francisco, Seattle, Washington, D.C., in the US and Ankara, Brussels, Havana, London, Madrid, Mexico City and cities throughout Venezuela. (Fig. 7)

Now let me ask the readers of this Blog, were any of the above reactions a surprise to you?  I expect all of you would answer with a resounding NO!. Similarly, I do not expect any reader would buy into the narrative that the invasion of Venezuela was to stop drug trafficking into the US.  The US DOJ already admitted the drug cartel cited by President Donald Trump as a justification for his military strike on Venezuela and capture of President Nicolas Maduro doesn’t actually exist. (Fig. 8).

Therefore, if the US military action to control the oil reserves in Venezuela  is a Hail Mary charge with no measurable economic benefits and certain of an avalanche of negative blow backs, what one may ask is the ultimate end game. 

At this juncture I like to table a few more pieces of the puzzle not commonly reported in Western MSM. They are  (a) The Security Chief of Maduro’s Palace Guard received US$50 million as the price to betray Maduro but was himself killed during the kidnap. (Fig. 9)

translated from Taiwan ETToday) and (b) Open Intelligence source mentioned on December 23, 2025 around midnight11 planes departed from Venezuela and in sequence the first 3 to Miami, USA from Simón Bolívar International Airport in Caracas, purportedly carried mining equipment but included a small portion of Venezuela’s refined strategic reserves, the fourth and fifth planes departed from Luisa Cáceres de Arismendi International Airport and carried senior executives of Petróleos de Venezuela, SA and their family members to land at Panama City.the sixth and seventh planes departed from a private airport in  the Portuguesa State and carried extremely valuable mining equipment, the eighth and ninth planes were Russian registered Antonov An-124 large transport planes with payload capacity of 120 to 150 tons which took off from Canaima National Park for a stealth cargo operation. The Canaima National Park is secretly linked to a storage facility of Venezuela’s silver mines. The tenth and eleventh planes were registered in China and operated privately by Cosco Shipping with unknown takeoff point nor destination. The final result were 847 tons of Venezuela’s strategic silver reserve were removed from Venezuela and majority of went to Russia and China and not Miami in a double sting operation. Then on December 29 2025, a most spectacular silver short squeeze was engineered which brought Western Bullion and SIB to its knees. (Fig 10).

This has been reported in my last Blog post. (c) China announced on October 2025 new silver export controls, transitioning to a licensing system that took effect January 1, 2026, replacing older quotas to tighten state oversight on strategic minerals, requiring licenses for designated companies and elevating silver's control similar to rare earths to prioritize domestic needs, with the policy impacting 2026-2027 exports.

(ii) Checkers and the game of Go: The famous Trend forecaster Gerald Celente said “our ability to read trends is in seeing the interconnections of global events”. Whilst Trump celebrate a successful Delta Force Operation Absolute Resolve, we are not short in memory of the failed Black Hawk Down, the retreat in Vietnam and Afghanistan. On the other hand Operation Absolute Resolve has all the hallmarks of covert operations of Mossad and the Israeli Defense Force (“IDF”). Within the same period, three events have come up for mentioning here: (a) Beginning on 28 December 2025, mass demonstrations erupted across multiple cities in Iran amid widespread dissatisfaction with the Islamic Republic government and a deepening economic crisis with every sign of a sponsored color revolution (b) Operation Iron Strike was approved by Israel’s war cabinet in January 2026 after consultation with Donald Trump. (Fig. 11).

Operation Iron Strike is currently in the mobilization phase with US and Israel and could begin as early as the next 72 hours and (c) China is in escalation dominance in response to a move by Japan to re-militarize. The diplomatic term used was “奉事召見”. The term "奉示召见" is a highly formal phrase used by the Chinese government to convey a top-level, stern diplomatic warning that carries the weight of national resolve. Neither Japan’s PM nor FM took heed when Japan Ambassador to China was summoned in response to Japan PM’s comment of a possible military intervention over China’s unification with Taiwan and now a full spectrum of pressure will escalate until Japan breaks.

In gaming of Go, both US and China are using a tactic called “壓強不壓弱”meaning taking out peripheral weak pawns before entering an opponent’s main theater. The dynamics has changed and the competitors on each said has hyperscaled all available resources, tactics and strategies. (Fig. 12)

Everyone has crossed the Rubicon and WWIII is not an if but a when. My prayers is that you stay alert and keep well.

Luke 21:34  "But take heed to yourselves, lest your hearts be weighed down with carousing, drunkenness, and cares of this life, and that Day come on you unexpectedly. 35  For it will come as a snare on all those who dwell on the face of the whole earth. 36  Watch therefore, and pray always that you may be counted worthy to escape all these things that will come to pass, and to stand before the Son of Man." 

 

Black Swans, Grey Rhinos and The Long Cycle of History

A look ahead for 2026 written on January 3^rd 2026.

1. Black Swans, Grey Rhinos and The Long Cycle of History: If 2025 can be summed up in one word, the word I choose is “awaken”. Awaken in the sense that a large population in the global village has finally woken to a reality that the promissory notes given to them by the ruling elites would not be honored. For the most part of my working life I was able to function because the prevailing environment was “Thy Word is Thy Bond”. I also witnessed first hand a gradual deterioration of integrity with a passing of the baton through generational changes. 

For 2026 my choice of words is “春” as in the season “Spring”  the passing of a period of cold and darkness into a season of early budding and life. “Spring” in English could also mean a coil under pressure ready to decompress in force. Depending on the individual circumstances, both may be applicable. For the majority of people, the future cannot be predicted with certainty, however, my Christian world view says” there is nothing new under the sun”.  So for pure academic interest, allow me to highlight a few signs that will mark what is to come.

(i)  Black Swans - A "Black Swan event" is a rare, unpredictable event with massive consequences, like a financial crash or major war, that people rationalize after the fact. What happened in Geo-politics and economics in 2025 and to happen in 2026 and beyond are but a continuation of well known frictions that are decades in the making. Allow me to post a cartoon I created back in October 2022.  (Fig. 1)

- the burning Dollar, China, Russia, Iran, North Korea, Venezuela, Afghanistan and Islamic Terrorism, what else is new.  It has always been beyond Uncle Sam’s band width to take on a handful of nations that would not bend the knee to the Empire. Sadly it took 7 years and a doubling of debt burden ($17 trillion to be exact) for the elites in US to learn they can never win by playing checkers with masters of the game of Go. For those readers who do not play board games, (Fig. 2) is a simplistic view of the level of sophistication between Checkers, Chess, Chinese Chess and Go.

It is a tragedy to have Checker level players running a big country.

(ii) Grey Rhinos - A "grey rhino" is a metaphor for a highly probable, high-impact threat that is often ignored despite obvious warning signs. Second only to Geo-politics and economics, is the impact of AI on the economy and employment. Jensen Huang CEO of Nvidia used a 5 layer cake as an analogy to represent the artificial intelligence ecosystem. (Fig. 3).

As a major beneficiary of the AI investment boom in US we need to take Huang’s narrow focus with a pinch of salt. For the past 70 years, educators have horned the pathway in the complexity of human learning with Benjamin Bloom’s learning model. (Fig. 4).

What we currently have in both US and China in terms of AI is but at the initial levels of machine learning when compared with human intelligence. AI is only at the primordial level of recognition, memory, recollection and repetition, albeit, at a traveling speed of electrons in a 4-nanometer pathway. To that we then add algorithmic enhanced regression, decision trees, grouping, classification and mimic images and languages. What the Big 5 within the Magnificent 7 in US is doing has more to build a rent seeking monopoly than true intelligence development. Are we surprised that DeepSeek only takes $6 million to train rather than hundreds of millions for Large Language Models in the US. Why go through the entire Cyber Space for answers when a survey of 8 to 10 web sites can already provide a good enough answer for majority of questions. Was it beyond comprehension in the MIT report that 95% of generative AI pilots failed to show measurable profit & loss (P&L) impact within six months, with only 5% scaling successfully, despite billions invested in AI experiments. The US AI bubble will burst and with it a deflation of asset prices and credit contraction beyond known financial history. The first sign already appeared when Blue Owl Capital pulled its equity funding for a $10 billion Michigan facility in collaboration with Oracle and OpenAI. (Fig. 5).

Across the Pacific, small yet significant steps have been taken by China in robotics and AI application from coal mining in Shanxi (Fig. 6)

to Xiao Mi dark factory for smartphones in Beijing. (Fig. 7) that are giving China a competitive cost advantage by leaps and bounds.

Coming back to Bloom’s Taxonomy, application is a critical third level of learning towards the ultimate objective of creativity.

(iii) The Long Cycle of History - In a financialized economy, civilian research are only rewarded if the research results in actionable trades. So what you read whether in MSM or stockbroker’s report are all instruments to create a narrative and momentum driven trading environment. Charlie Munger said "The big money is not in the buying and selling, but in the waiting". Warren Buffet reinforces this idea by saying, "The stock market is designed to transfer money from the active to the patient". (Fig. 8).

I would suggest we all take shelter from the day to day background news and noise pollution and look back at the Long cycle of History.  A good indicator is to take a look at the long credit cycle represented by an interest rate graph of the US 10 Year Treasury (Fig. 9).

60 Years ago in 1964, we are about to enter a cycle of heightened inflation towards a default of Bretton Woods in 1971. This time round, the reverse will happen and Bretton Woods 2.0 will be reestablished. Human nature is such that no one wants to buy gold at $1,500 an ounce in 2019 but would queue up in front of bullion dealers when the price hit $4,500.

2. Asset Class Performance 2025.

For 2025, various asset class performance as follows(Fig. 10):

Silver (+142.56%); Gold (+62.5%); Uranium (+46.7%); Copper (+41.75%); Russian Rubble (+40.7%); Hang Seng Index (+30.61%); Shenzhen Index (+28.51%); Nasdaq (+20.34%); SP500 (16.64%); Euro (+14.4%); DJI (+13.38%); CNY (+4.38%); JPY (+0.55%); Bitcoin (-9.71%), Brent Oil (-19.68%).

Allow me to flag some short term red alerts that everyone should take note.

(a) The US financial system is out of cash despite the Fed already pumped $101 billion by Dec 30. It was only announced that from December 12, the Fed would buy $40 billion per month and the Fed cannot predict just 3 weeks out. (Fig. 11)

(b) The US Treasury can only fresh fund Treasury issues through synthetic demand via derivatives driven basis trade and SOFR volume (Inter-bank Overnight Lending) continued to increase crowding out commercial funding needs. (Fig. 12)

(c) Emergency Funding Arrangements (“REPO”) are tapped repeatedly in December even on Christmas and New Year’s Eve because of liquidity squeeze.(Fig. 13)

(d) There is apprehension amongst banks operating in the US. As at December 31, 2025, some $105 billion surplus liquidity are parked by some banks with the Fed using the Reverse Repo Facility despite a higher yield offered by SOFR. There are other banks in need which could not obtain overnight funding despite offering collateral of Treasury or Agency Notes. (Fig. 14).

My friends be on guard and stay safe.

Ecclesiastes 3:1  To everything there is a season, A time for every purpose under heaven: 

Ecclesiastes 1:9  That which has been is what will be, That which is done is what will be done, And there is nothing new under the sun. 10  Is there anything of which it may be said, "See, this is new"? It has already been in ancient times before us. 

 

The Curse of an Exorbitant Privilege

 

The 5 weeks ended on December 12, 2025, interesting news items to look at from the past periods are:

The Curse of an Exorbitant Privilege: In the first James Bond film, Sean Connery in his role as James Bond sarcastically remarked to Dr No (the villain in the movie) “World domination. The same old dream. Our asylums are full of people who think they’re Napoleon, or God”. (Fig. 1).

It was 1962, I was in my junior high school and such phrases made a profound impact on my young mind about power struggles of big and mighty nations. 63 years has since come and gone and sadly, the world’s elite and its folly never changed, only the lead actor got replaced. As 2025 is drawing to a close let us wrap up this tumultuous year with reflections of the triumphs and tragedies of 2025 that we may all move forward with lessons learn and be prepared to face the challenges of 2026.

(i) National Security Strategy of the United States of America: Released on December 4, 2025, this document is intended for both US domestic political consumption as well as a signal to the international audience. (Fig. 2).

Some call it a document of US strategic retreat from the role of the ‘World’s Enforcer”, but I rather frame it as a pragmatic approach to a temporary cease fire.  US needs to regroup and rearm until she is certain to successfully reassert herself as the Alpha. A summary of the document, with apologies for the smaller fonts, is found in Fig. 2. The gist of the message is if the Atlantic and Asian allies want to deal with regional rivals, US is no longer capable to lead the charge but be quite willing to take a back seat and sell them US made weapons. US will concentrate on her own backyard and will first subdue lesser defiant countries like Venezula, Honduras, El Salvador, Pabama and Columbia, then bigger fish such as Mexico and Brazil to check China’s influence.  

(ii) Japan Militarism: Knowing US must lean more on Japan to face the China threat, Prime Minister Takaichi and her right wing supporters is pushing the envelop to free the shackles imposed upon Japan after the WWII defeat - to rebuild her military and an independent voice as a middle power.  (Fig. 3).

Takaichi’s tactic is to provoke China and hope with an overreaction by China, US may give Japan a longer leash and elbow room to grow her military.  Sensing Japan’s miscalculation, China FM Wang Yi, with over 40 years experience in diplomacy, immediately seize the moral higher ground of the post WWII world order enunciated by the Yalta and Potsdam Accord. This has boxed Japan in and bind all members of the UN Security Council to the established rules. Unlike the US Democrats fabricated mantra of “Rules-based International Order”, there is no ambiguity to the world order towards Japan and consequently US, UK and France are silenced from lending support to Japan. Please find key terms of the Potsdam Declaration in (Fig. 4).

The Catch 22 for US is if the Potsdam Declaration is not uphold, US has no more rights to station her military in Japan at all. Then with a combination knockout punch, China moved unrelentingly onto escalation dominance over the incident with both a projection of power over previously disputed territories as well as an economic and technology Full Nelson. Kind of nip Japan Militarism in the bud.

(iii) The Coalition of the Unwilling: With Trump quickly distancing Zelensky to keep his gun powder dry at home, all the four European stooges (Macron, Starmer, Merz and Zelensky) could do is to sing “Can’t Buy Me Love” in front of 10 Downing Street. (Fig. 5).

Out men, out gunned and out of funds, the quartet is still trying to pirate Russian funds from Euroclear to bankroll a bloodbath tinted with graft and corruption. Poor Europeans, when will they ever wake up to make their elected political leaders accountable. For over 20 years, since 2004, these politicians have continued their expansion eastward into former Soviet satellites in total disregard to Russia’s plead and warning. Now with immanent defeat they want a pause and regroup and rearm. People died, homes, families and energy infrastructures destroyed and nations are d-industrilized yet no one has been brought to account. May be that is how true democracy works because we all get the type of leaders we deserve.

(iv) The Curse of an Exorbitant Privilege: "Exorbitant privilege" refers to the special financial advantages the U.S. gains from the U.S. dollar being the world's primary reserve currency, allowing the U.S. to borrow cheaply, run large trade deficits, and finance its spending by selling debt to other nations, a term coined by French Finance Minister Valéry Giscard d'Estaing in the 1960s. Essentially, the world needs U.S. dollars for trade and reserves, creating massive demand for U.S. Treasury bonds, enabling lower interest rates for America even when it spends beyond its means, which other countries can't easily do. The license to print money at will has lured theUS elites  to protect this privilege above all economic and security considerations. US has devoted all her resources to expand her military industrial/technology supremacy to nurture this Exorbitant Privilege and in the very process emptied her Treasury and incurred huge debts. This myopic vision was adopted by every elected official even at the expense of hollowing out national support infrastructure, industries, STEM education and engineering efficiencies and skills on a false pretext that US can always print and buy whatever she needs. This thinking came about because the elites are delusional that there is no alternative to the USD. After 25 years of rampant abuse of global finances from the dotcom bubble through the sub-prime fiasco to the Covid Modern Monetary Theory, the day of reckoning came in December 2025. On December 12 2025, the Federal Reserve was finally forced to start monetizing Federal Debt again by buying short term Treasury bills, knowing fully the world is watching a scenario of print or default and bankruptcy. I have given readers of this Blog a heads up on my last post published on November 8, 2025. With Fed’s renewed printing, the Dollar Hegemony is officially finished. One by one, we saw the three pillars that propped up the USD faded away, the US Economy, US Technology and the US Military. One may say. the concluding chapters of this saga is documented precisely by the aforementioned National Security Review under point (i) above.

Market reaction to the Fed’s rate cut and printing is one of frustration:

(a) Interest Rates - Fed Funds Rate is only used when banks are out of overnight funds and need to borrow on an emergency basis. (Fig. 6)

US Yield Cure shows from one month to 5 years, interest rates only marginally dropped by a few basis points, much less than the 25 basis point cut by the Fed, whilst longer duration rates actually rose (bond prices lowered) implying the Fed’s action will have a negative impact on the economy. In fact, Jeffery Gunlach, the New Bond King said, the Fed decision is late by one year of what the market has been saying since December 2024 judging by the yield of the 2YR Treasury Note. (Fig. 7)

(b) Exchange Rate: DXY dropped as a result of the Fed’s rate cut and commencement of the forever QE. (Fig. 8).

(c) Stock Market: Nasdaq initially reacted to an increase in liquidity by the Fed’s action but quickly turned to profit taking in fear of an AI bubble burst. (Fig. 9).

Given the forgoing, perhaps the best way to sum up progress and setbacks in the market place in 2025 may be to just simply look at what was being championed respectively by US and China in 2025. In the former case, US Tech stocks and crypto currencies. For China, it was precious metals as reserve assets and a Chinese alternative to technological Innovations. The result, in order of performance for the year 2025, was as follows: Silver (+114%), Gold (+64%), Shenzhen Technology Innovation Index (+43%), Russian Ruble (+37%), Nasdaq (+20%) and Bitcoin (-3%). (Fig. 10).

Yet, irrespective of whether one correctly picked the winners, life remains a struggle for the majority in the global village because as nations tried to trick one another to stumble in intense competition, commerce hibernate in defensive posture. For 2026, we should expect as many false starts and misadventures as in 2025.  So long as politicians vested with self interests dominate the leadership of developed economies, inflation and high unemployment will be the new normal. AI will likely see a K type development and it is obvious where the up-line and down-line will be located. The trend on asset class performance we witnessed in 2025 will continue but none will rejoice because they just represent currency debasement than productivity gains. Cost of living burden will become worse for the majority. The fourth turning will be in full bloom and civil unrest will be a common occurrence. Military tension between super powers should eased, but sadly they will be replaced by armed conflicts between regional and middle powers as diversion tactics from domestic problems and for opportunistic gains. All in all nothing to cheer about. My prayers are for your resilience and inner peace in the midst of these interesting times and that your connection with wisdom and love from on High will shine through.

Ecclesiastes 12:1  Remember now your Creator in the days of your youth, Before the difficult days come, And the years draw near when you say, "I have no pleasure in them": 2  While the sun and the light, The moon and the stars, Are not darkened, And the clouds do not return after the rain; 3  In the day when the keepers of the house tremble, And the strong men bow down; When the grinders cease because they are few, And those that look through the windows grow dim; 4  When the doors are shut in the streets, And the sound of grinding is low; When one rises up at the sound of a bird, And all the daughters of music are brought low. 5  Also they are afraid of height, And of terrors in the way; When the almond tree blossoms, The grasshopper is a burden, And desire fails. For man goes to his eternal home, And the mourners go about the streets. 6  Remember your Creator before the silver cord is loosed, Or the golden bowl is broken, Or the pitcher shattered at the fountain, Or the wheel broken at the well. 7  Then the dust will return to the earth as it was, And the spirit will return to God who gave it. 8  "Vanity of vanities," says the Preacher, "All is vanity."