A Hair Breadth Escape from Nuclear WWIII

The week ended on May 30, 2025, interesting news items to look at this week are:

1. A Hair Breadth Escape from Nuclear WWIII: The nuclear doctrine of both US and Russia states that should the countries' nuclear defense infrastructure be attacked, the country will respond with its nuclear arsenal.  At the apex of the command and control of a nuclear defense system is the President who carries on a 24/7 basis the launch codes of  nuclear missiles. So when an attempted assassination was made against Putin in Kursk by Ukraine using a drone swam under the guidance and intelligence of  US led NATO, a nuclear holocaust was very much on the cards.(Fig. 1)

 But the big question is why the West is in such desperation.  A question that readers of this Blog are well aware but perhaps still a bit uncertain as to the timing of the exact event horizon. Allow me to quote from the world’s best Trend Forecaster, Gerald Celente, “When all else fails, they take you to war”. (Fig. 2)

(i) NATO face a total defeat at the Ukraine Proxy War: It is no secret among the Think Tanks in the West a plan to Balkanize Russia and loot her resources began in earnest in public forums as early as 2014. (Fig. 3)

More than 10 years has lapsed and now the best US and Europe can hope for is Russia would agree to a 30 days cease fire as the Kiev regime faces an imminent total collapse. UK, France and Germany are particularly anxious because they have bet the shop and their dream of a greater Europe incorporating Russian colonies (Fig. 4) to outpace US and China as the alpha would be forever shattered.

One of the key consequence of a failure to capture Russian resources (estimated at 75 trillion  Fig. 5)

would be an existential risks to the entire European financial architecture. In a candid warning by ECB  this week, the euro area currently has an “exposure”—that is, claims and liabilities—related to gold of around €1 trillion. I note with interests that the entire gold reserve in the euro area of approximately 11,000 tons has but a current market value of $1.1 trillion. That means virtually all the gold reserves in the euro area has been sold, pledged or derivatively shorted already and any further weakness in confidence would mean a massive run on ECB and European banks to ruins. (Fig. 6)  

Just one week earlier, ECB has also warned that they would push back the implementation of BASEL III similar to US. (Fig. 7).

Please note one of the key ingredient in BASEL III is the “stable funding ratio”, which means if a bank has a claim against them in gold, they are required to have physical gold in their vault, a feat which is impossible to achieve given every ounce of gold a European bank has, there now is speculation that claims of 100 ounces are on the books. 

(ii) US totally frustrated by China: The tech war, the trade war, the smear war, the colour revolutions in Hong Kong and Xinjiang, the space war, the AI war and now the drones and missiles tech war, US has not been able to advance too much against China. The latest twist is cancellation of student visas in a witch behind every rock hunt. (Fig. 8).

So long as US would not address its military and dollar oppression against her own people and other nations, the decline of the US empire is a mathematical certainty. Every maneuver that Trump has come up so far has ended US in a deeper financial hole. DOGE and Musk is gone and sooner or later the rest of the financier backer of the politicians will jump ship like rates. The US Federal Government debt and expense has gone parabolic. (Fig. 9).

At the current trajectory, all tax revenue will be chewed up by interest expense by 3032. (Fig. 10).

And what hare brain scheme does the Administration come up with to deal with the debt problem? Jack the price up on Cryptos by wrapping US Treasuries around stable coins as a new crypto trading currency and use inflated cryptos to pay off foreign creditors. Officially it is called “The GENIUS Act, or Guiding and Establishing National Innovation for U.S. Stablecoins Act”. For the sake of avoiding WWIII, my prayers is that the Americans would listen to Winston Churchill for once. (Fig. 11)

Leviticus 19:33  'And if a stranger dwells with you in your land, you shall not mistreat him. 34  The stranger who dwells among you shall be to you as one born among you, and you shall love him as yourself; for you were strangers in the land of Egypt: I am the LORD your God. 35  'You shall do no injustice in judgment, in measurement of length, weight, or volume. 36  You shall have honest scales, honest weights, an honest ephah, and an honest hin: I am the LORD your God, who brought you out of the land of Egypt. 37  'Therefore you shall observe all My statutes and all My judgments, and perform them: I am the LORD.' " 

Hyper Involution and Hyper Inflation

The week ended on May 23, 2025, interesting news items to look at this week are:

1. Hyper Involution and Hyper Inflation: Two important pieces of information in the media this week have focused the mind on the extremely perilous state of the global economy and geopolitics. The root of the malignancies began in 2018 and unless remedied, WWIII will almost be a certainty. In China, the malignancy is Hyper Involution and in US, Hyper Inflation. The world’s two biggest economy has a combined share of 44% of the global GDP and they have respectively weaponized the supply chain and payment chain in a cage fight to out last the opponent. There will be no escape from a sea of pain for all third party countries unless US & China reconcile their differences.

(i) Hyper Involution: Involution (内卷, neijuan) in the Chinese economy is a sense of diminishing returns, where intense domestic competition and pressure, particularly in education and the workplace, result in a feeling of futility and a "rat race" with little real progress. The genesis of Involution began in 2018 when the U.S. drew first blood in a Tech War against Chinese communication giants Huawei and ZTE just when China made her maiden launch of a 5G integrated telecommunication system. The US, fearful of losing its preeminence in semiconductor technologies, a key driver in substituting the petrodollar hegemony by the tech dollar hegemony has since rolled out a full spectrum attack and encirclement of everything Chinese. In response to an existential threat, the Chinese national team decided to reallocate all funding away from the speculative sectors namely real estates and shadow banking into industries, particularly new energy, NEV(new energy vehicles) and high speed rail.

(Fig. 1) is a telltale picture of this particular shift which explains most of the economic phenomenon we observe today both in China and internationally. From a peak of Rmb 6 trillion annual new lending in 2018 to the real estate sector, the downdraft imploded to a net liquidation in 2024. Conversely, annual new bank lending to Chinese industries rose from below Rmb 1 trillion to over 5 trillion in 2024. Provincial and municipal governments all jumped into the bandwagon and as an illustration, between 2019 to 2021, there were 500 registered NEV companies with an active participation of 400 NEV brands. In China, commercial competition is both a sprint and a marathon and by 2024, 350 NEV brands has fallen by the wayside and only 50 brands survived  (Fig. 2).

However, competition between NEV brands is not unique, the same cutthroat competition is found in semiconductors, mobile phones, AI, consumer electrical appliances and electronics, e commerce, food and beverage and right down to the gig economy like share ride, delivery and logistics. The key to survival in China is speed, innovation, razor thin margins, continuous cost cutting and capacity expansion to capture unfilled demand and market share. Such competition eventually spilled over to jobs and employment with the “996” work culture all pervasive in China (The "996" work culture in China refers to a grueling work schedule where employees are expected to work from 9:00 AM to 9:00 PM, six days a week, which translates to 72 hours per week. This system is widely prevalent in the tech industry and is a violation Chinese labor laws, which set a standard workday of eight hours and a maximum of 44 hours per week.) In the long run, the severe competitive culture is just burning of candles from both ends and by 2025 both the Chinese National Team and industry leaders sense the risks of this unsustainable behavior. On a macro level, China national savings and liquidity is at record levels and despite US out all trade war, China trade surplus hit $1 trillion mark yet citizens are pessimistic and fearful of spending. Why, their net-worth is contracting because of collapsing property prices and job security is gone as business shutters on involution, supply chain realignment and skills upgrade.  DJI Drones (with a 70% global market share of civilian drones), Midea Group (the largest Appliance Maker in China) and Haier (Owner of GE Appliance in US, Fisher & Paykal in NZ, Candy in Italy, Hoover in Europe, AQUA and Sanyo in Japan) all issued work rules that no employees should stay behind in the office after 6pm and enforced by wifi and power switched offs. Discussions are ongoing with policy implementation at government and industry association levels for new development protocols on a more balanced approach. I am not here to make fun of a serious situation, but if cleanliness devolved to the point of OCD and  mysophobia, such a behaviour is detrimental to one’s health and severely affects the well being of those that needs to interact with the sufferer.  The EU China Accord to set a floor price for Chinese NEV imports is a good beginning as it gives breathing space for EU car makers and with a smaller volume but higher margin for Chinese exporters. Competition remains and consumers are not taxed but protected with a wider range of selections.

(ii) Hyper Inflation: Across the Pacific, the malignancy is also a form of OCD (Obsessive Currency Debauchery). Just in the past week we saw; (a) Moody downgrade US Credit Rating, (b) Miserable 20YR bond auction with an interest rate cross over beyond 5%, (Fig. 3)

(c) Yet, Congress just passed the Big Beautiful Spending Bill that would add another $4 trillion to the unsustainable federal deficits (Fig. 4),

(d) Another $175 billion for the Golden Dome defense shield (Fig. 5)

(e) Federal Reserve stealthily reignited QE with a $44 billion purchases in 4 days (Fig. 6) whilst officially the QT program is still on to contract Fed’s Balance by $5 billion a month.

(f) To calm a very nervous market, Stephen Miran, Chairman of White House’s Council of Economic Advisers was said to deny this week the Administration was planning to re-rate bonds held by foreign countries by forcing an extension of maturities to 50 to 100 years. (Fig. 7).

In 2018, a precedent was established by Greece in a default restructuring exercise that effectively halved the carrying value of the bonds. (g) EU to delay implementation of Basel III rules and (Fig. 8)

(h) Treasury Secretary Bessent is set to relax SLR (Supplementary Liquidity Ratio) to allow banks to hold more US Treasuries than existing prudential regulations permits. No doubt the current lack of genuine buyers for US Treasuries is giving the Administration little choice but to stuff US commercial banks with increasing US Government Debt and to ignore the disaster that bankrupted Silicon Valley Bank in March 2023 . (Fig. 9)

There can be no cure to the malignancy of the Western financial system so long as the powers that be refuse to acknowledge the use by date of their empty promises on currencies and debt issuance has finally arrived.

My hope and prayers is that China can relax a little and US will have the courage to claw back some of the ill gotten gains by those who gamed the system, since post Bretton Wood,s for a much needed global re-balancing

1Timothy 6:6  Now godliness with contentment is great gain. 7  For we brought nothing into this world, and it is certain we can carry nothing out. 8  And having food and clothing, with these we shall be content. 9  But those who desire to be rich fall into temptation and a snare, and into many foolish and harmful lusts which drown men in destruction and perdition. 10  For the love of money is a root of all kinds of evil, for which some have strayed from the faith in their greediness, and pierced themselves through with many sorrows. 

Not 4D chess but just a repeat act

The week ended on May 16, 2025, interesting news items to look at this week are:

1. Not 4D chess but just a repeat act: Winston Churchill once said, “Those who fail to learn from history are doomed to repeat it.” (Fig. 1).

Some followers of Trump think the 47^th US President is a brilliant 4D chess master but when I looked into the sequence of orchestration by the White House over the past week, the “reality trade war show” is but an old act in a highly compressed time frame. To fully understand what happened we need first a rewind back to 1944.

(i)  Bretton Woods Agreement and Creation of the World Bank and IMF: The three institutions that established the post WWII international monetary order was set up in 1944. All these institutions are highly skewed in favor of US interests (US has veto powers over both the World Bank and IMF) and simultaneously weakened the remnants of the British and French Empires.  Gold as the ultimate international settlement currency and reserve was replaced by USD. To accomplish what US wanted, US first forced the UK Government to bend the knee and then use the UK agreement as a model to convince Continental Europe to abide.  A simple Google search revealed the foregoing information in (Fig. 2).

Fast forward to May 8 2025, UK was the first country that concluded a Trade Deal with US and in it the hidden power of US to sanction trade between UK and China. (Fig. 3).

(ii) May 12 2025 US China Trade Truce: The US stock market reacted to the truce as if Happy Days are here again and the world at large a sign of relief. But the important thing to watch is what will the respective parties do in the intervening 90 days period. I am certain US will (i) expedite the conclusion of deals with other countries both to extract maximum advantage to US with hidden agenda to embed clauses in all trade agreements that will provide US a right to later on encircle China, like banning Huawei AI chips. (Fig. 4).

(ii) Get he Fed to lower interest rates quickly for refinance the $6.5 trillion Treasuries due in June. (iii) Set the stage for a currency war on China and to that extent we have already witnessed a massive flow of hot money into Hong Kong as reflected in the Hong Kong Inter-bank market. The one month HKD inter-bank interest rate showed a jaw dropping waterfall decline of 274 basis points over the past 14 days. (Fig. 5).

Hong Kong is the largest offshore CNY trading center and I am sure the ultimate target is the financial architecture that enable and assist international trading and settlement using CNY, and (iv) Discredit gold as the backbone for the Global Majority Balance of Payment currency and reserve asset. (v) Continue to destabilize Asia by instigating Regional Wars as is happening between India and Pakistan and may be elsewhere along OBOR. China will continued with her careful defense posture and pull out new tools against US at a time of her choosing. Is China aware of US antics and further future escalations? What do you think?

(iii) May 16 2025 Trump Middle East Visit: While in the wealthy Gulf region, Trump announced deals that would see Saudi Arabia, Qatar and the UAE buy US arms and invest in American firms. According to the White House, Trump secured a total of $2 trillion in investments, $0.6 and $1.4 trillion  respectively from Saudi Arabia and UAE during the trip. (Fig. 6).

But as is typical for Trump and reported by the Washington Post, the deals included deals concluded before Trump’s presidency and the figures added up to only half of what was claimed. (Fig. 7).

The most interesting part of the show is the timing and is meant to showcase nations are willing to satisfy Stephen Miran’s bucket list (see my April 18 Blog An American Saw Cut Double Barrel Shotgun and a Chinese Sniper Rifle with Silencer and Fig. 8)

2. Financial Market Performance for April and first two weeks of May: (Fig. 9)

TSLA(+34.33%%), Bitcoin (+26.1%), Nvidia (+25.57%), Nasdaq (+12.15%), S&P 500 (+5.94%), Swiss Fr (+5.44%), Eur(+3.11%), Russian Ruble (+2.84%),  JPY (+2.80%), GBP(+2.66%),  Gold (+2.13%), Rmb (+0.67%),  USD Index (-2.97%), Silver (-5.47%), VIX “Volatility Index” (+45.16%), USD Index (-3.82%),  Copper (-9.74%), Oil (-10.56%) and VIX “Volatility Index” (-12.42%). Well the manipulated market is saying “Risk On”. Volatility index is way down and when Microsoft lays off 6,000 staff or 3% of its workforce, it is good news and proves the power of AI and Nvidia was again bid to stratosphere. (Fig 10).

In the meantime, US credit card and student loan defaults have sky rocketed (Fig. 11)

and Treasury interest rates resumed its climb both for YR2 (Fig. 12 )

and Duration Treasuries (Fig. 13).

The official narrative is market is turning from FEAR to FOMO and champagne is popping once more. Nonetheless the Bond Vigilantes are not buying. For my books I bought more gold on the dip and if I have tech stocks and bitcoin I will sell them into the contrived  rally. Nothing was done to fix US debt death loop except more chaos.  

II Corinthians 9:6  But this I say: He who sows sparingly will also reap sparingly, and he who sows bountifully will also reap bountifully. 7  So let each one give as he purposes in his heart, not grudgingly or of necessity; for God loves a cheerful giver. 8  And God is able to make all grace abound toward you, that you, always having all sufficiency in all things, may have an abundance for every good work. 9  As it is written: "HE HAS DISPERSED ABROAD, HE HAS GIVEN TO THE POOR; HIS RIGHTEOUSNESS ENDURES FOREVER." 10  Now may He who supplies seed to the sower, and bread for food, supply and multiply the seed you have sown and increase the fruits of your righteousness, 11  while you are enriched in everything for all liberality, which causes thanksgiving through us to God.