The Sum of All Fears

The week ended on October 30, 2026, interesting news items to look at for the past fortnight are:

The Sum of All Fears: The title of this Blog came from Winston Churchill: "Why, you may take the most gallant sailor, the most intrepid airman or the most audacious soldier, put them at a table together - what do you get? The sum of their fears." (Fig. 1).

Modern interpretation of the quote is “when leaders, military commanders, or rival nations sit down with built-in mistrust, they do not find calm or reason; instead, individual insecurities, miscalculations, and worst-case scenarios multiply into a collective panic.” This pretty much sums up the sentiment prevailing in global Geopolitics and Geo-economics as we come toward the end of 2026.

1. Rage in the Streets Across Europe - Generational rage and widespread social unrest are sweeping through European cities, fueled by a potent mix of economic stagnation, underfunded education, and an acute housing crisis. Driven primarily by Gen Z youth and coordinated through social media, the uncoordinated movements have seen hundreds of thousands of people take to the streets. In France, initial student strikes over dilapidated schools escalated into severe nationwide riots and curfews, while tens of thousands in Italy have blockaded landmarks like the Colosseum to protest surging living costs and military spending. Across Spain and Portugal, tent cities have been erected by activists demanding affordable housing, as the unrest spreads to Germany and Eastern Europe ahead of a major continental election cycle. (Fig. 2).

European leaders are at their wits’ end as to how to solve all the issues that have plagued the nations on the Continent. Historians and philosophers ascribed the fall of the West to four reasons and termed them “The Four Stupidities of Declining Civilizations.” (Fig. 3)

(i) Solving Every Problem Until Solutions Kill You: Adding layers of bureaucracy and taxes eventually leads citizens to prefer abandonment of the system over its burden.

(ii) Manufacturing More Princes Than Thrones: Overproducing elites causes fierce internal civil conflict as rejected insiders mobilize aggrieved populations.

(iii) Trading the Deed for the Argument: In the Age of Intellect, debate replaces action, childlessness spikes, and entertainment/comfort replace long-term creation. NATO - No Action Talk Only.

(iv) Praying for a Caesar: Exhausted by endless political debate, the public voluntarily forfeits freedom to a strongman ("Caesarism") who promises to simplify life and make the machinery stop mattering.  

As we shall see in the following paragraphs, the fall of the Western Civilization have a very simple reason but very deep roots, with manifestations in most nations and economic sectors. This occurs when “intelligence succumbs to ideology—groupthink.” (Fig. 4)

 There are four observations that tie this behavior together:

(i) Bonhoeffer’s Theory of Stupidity — The German theologian and philosopher Dietrich Bonhoeffer famously wrote about this while imprisoned by the Nazis. He argued that stupidity is a moral defect rather than an intellectual one.

* The Core Idea: An intelligent person can be made stupid if they are overwhelmed by a powerful external ideology (like a political or religious movement).

* How it Works: The ideology essentially takes over the person's independent consciousness. They become a tool of the movement. When you try to reason with them, you aren't speaking to the person; you are speaking to their slogans and dogmas.

(ii) Groupthink — Coined by research psychologist Irving Janis in 1972, Groupthink occurs when a group of well-intentioned, highly intelligent people make irrational or dysfunctional decisions driven by the urge to conform.

* The Core Idea: The desire for harmony, loyalty, and consensus within the "in-group" overrides any realistic appraisal of alternative courses of action.

* How it Works: Intelligent individuals actively suppress their own doubts, censor their peers' dissenting opinions, and isolate themselves from outside perspectives to maintain group cohesion.

(iii) Motivated Numeracy and Identity-Protective Cognition —  Modern psychological research, notably by Yale professor Dan Kahan, shows that intelligence often makes people better at rationalizing bad ideas rather than helping them find objective truth.

* The Core Idea: When an issue becomes tied to a person's cultural or political identity (their "creed"), their primary goal shifts from "being accurate" to "protecting my status in the tribe."

* How it Works: Highly educated individuals use their superior cognitive skills not to evaluate facts objectively, but to construct elaborate justifications and arguments to defend their group's ideology. In short: smart people are better at fooling themselves.

(v)  Ideological Subversion and "Useful Idiots" — A concept often attributed to political history (and detailed by KGB defector Yuri Bezmenov), this describes how highly educated intellectuals—often referred to as the intelligentsia—can be manipulated into supporting destructive ideologies.

* The Core Idea: People who are highly educated can become so enamored with abstract, utopian theories that they lose touch with common sense and practical reality.

* How it Works: Because they are heavily invested in the "moral superiority" of the creed, they willfully ignore the negative real-world consequences of that creed.

2. Merz met Takaichi - German Chancellor Friedrich Merz met with Japanese Prime Minister Sanae Takaichi in Tokyo on October 28, 2026, marking Merz’s first official visit to Japan since taking office. Both leaders released joint declarations to combat economic coercion, safeguard critical minerals, and diversify supply chains for semiconductors, batteries, electric vehicles, industrial AI, robotics, and pharmaceuticals. The two WWII Axis Powers have been left far behind in the race of the Industrial Revolution 3.0 and 4.0 have nowhere to turn but onto each other. But what a mistake—joining hands of losers with similar redundant abilities would hardly gain any advantage in areas of their incompetence. (Fig. 5)  

3. AI Groupthink - Cracks are now visible in the AGI (Artificial General Intelligence) Tower of Babel as the financial market finally realized that artificial intelligence has delivered "zero" measurable financial payoff to mainstream corporate America outside of a small group of major technology companies (the "Magnificent Seven"). While capital expenditure on AI infrastructure continues to surge at the top, the broader economy has yet to see corresponding revenue growth or margin expansion, and AI funding has suddenly stopped. Since my alert on August 15 and subsequent updates thereafter, the performance of AI platforms and related semiconductor stocks has been disappointing. (Fig. 6)

Microsoft (+5.6%); Meta (+3.50%); TSMC (-4.45%); Nasdaq (-5.30%); Amazon (-8.30%); Micron (-8.52%); Nvidia (-8.85%); SK Hynix(-9.95%); ASML(-10.56%); Gold(-11.5%); Oracle(-12.85%), Philadelphia Semiconductor Index (-13.2%); Google (-18.62%); Silver (-24.23%) and Coreweave (-47.59%).

4. TINA USD Groupthink - Bloomberg published an exclusive report detailing how countries and regions most aligned with the United States significantly cut back on their U.S. Treasury purchases and dollar-related reserve accumulation. In the first eight months of 2026, countries and regions with the closest ties to the United States made net purchases of $174.3 billion in U.S. Treasuries, excluding short-term Treasury bills, down more than 60% year over year and the lowest level for the same period since 2021. Japan, the largest foreign holder of U.S. Treasuries made net purchases of just $389 million in the first eight months, down 99% from the same period last year. (Fig. 7).

According to comments made by Masahiko Loo, senior fixed income strategist at State Street Investment Management, to Bloomberg, the U.S. Treasury market has not lost foreign buyers, but rather “the buyers who would automatically buy.” He noted, “An increasingly unpredictable United States makes it increasingly difficult for investors to find a reasonable basis for large-scale, structural overweight positions in U.S. Treasuries and for automatically channeling capital back into the U.S. Treasury market.”

Meanwhile, private investors such as hedge funds and banks now hold about 70% of U.S. federal government debt, close to the highest level since 1990. Private investors are more sensitive to price changes, and financial markets could react more sharply if concerns arise about U.S. monetary policy, the economic outlook, or the widening fiscal deficit.

Pardon me for repeating my parroting of synthetic US bond demand through interest rate and FX swaps. USD is still useful as a unit of account, but it is increasingly losing its usefulness as a unit of exchange and is no longer treasured as a store of value. My thesis that such derivatives driven synthetic bond demand is unsustainable and will break in October 2026. W has manifested in almost all asset class sectors in the financial market.(Fig. 8)

The World Gold Council projects full-year 2026 central bank purchases to land around 850 tonnes, closely matching 2025's total of 863 tonnes as emerging markets and reserve diversification continue to support long-term demand.

5. CIA Playbook for USD Stabilization by Chaos in Other Economies -  There are multiple reports and official investigations regarding agent provocateurs, masked agitators, and foreign interference during the recent autumn 2026 riots and protests in Europe (particularly in France and Italy) (Fig. 9)

Italian Government Investigations: Italian officials launched inquiries into whether external or foreign actors helped fuel violent cost-of-living protests in Milan and other cities. Italian Defense Minister Guido Crosetto described aspects of the unrest as part of a potential "hybrid war", prompting Prime Minister Giorgia Meloni's government to seek briefings on possible foreign provocateurs.

Official Stance on Foreign Spark: While European authorities and the European Commission acknowledge widespread foreign manipulation of information and digital amplification after the fact, officials have noted a current lack of conclusive evidence proving that foreign powers directly engineered or sparked the physical riots on the ground.

For those readers from Hong Kong, we are all too familiar with such CIA tactics in the black mob riots in 2019. (Fig. 10).

Dear readers, history need not repeat exactly, but history shows that mankind repeats the same mistakes and does not learn from history. I am sorry if you all get too tired of my parroting, but since I rarely get any feedback from you guys, that you are prepared, I will continue until this ill wind is behind us. Be safe and stay well.

Ecclesiastes 3:1  To everything there is a season, A time for every purpose under heaven: 2  A time to be born, And a time to die; A time to plant, And a time to pluck what is planted; 3  A time to kill, And a time to heal; A time to break down, And a time to build up; 4  A time to weep, And a time to laugh; A time to mourn, And a time to dance; 5  A time to cast away stones, And a time to gather stones; A time to embrace, And a time to refrain from embracing;6  A time to gain, And a time to lose; A time to keep, And a time to throw away; 7  A time to tear, And a time to sew; A time to keep silence, And a time to speak; 8  A time to love, And a time to hate; A time of war, And a time of peace.