How a World Order Ends

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And What Comes in Its Wake

A stable world order is a rare thing. When one does arise, it tends to come after a great convulsion that creates both the conditions and the desire for something new. It requires a stable distribution of power and broad acceptance of the rules that govern the conduct of international relations. It also needs skillful statecraft, since an order is made, not born. And no matter how ripe the starting conditions or strong the initial desire, maintaining it demands creative diplomacy, functioning institutions, and effective action to adjust it when circumstances change and buttress it when challenges come. Continue reading

We Have Hit Keynesian Nirvana: A Third Of All Containers Shipped From Long Beach Port Are Empty

In the past several months, it has been virtually impossible to make any sense of the conflicting trends involving US and global trade. On one hand, there is global trade, which as we have covered since the spring, has been in a state of consistent decline. Some example of this:

Where things get more complicated, however, is when looking at the US. Here, macro data throughout the summer had suggested more or less smooth sailing in the trade space, and it was only a week ago that the facade started to crack, following the ugly advance trade report, when as we reported there was a “16% Surge In August Trade Deficit; Imports Jump As Exports Drop.” Continue reading

South China Sea: US mulls sending planes, ships near disputed islands

Reclamation work by China on Mischief Reef in the Spratly group of islands in the South China Sea.

 

Washington: The Pentagon is considering sending US military aircraft and ships to assert freedom of navigation around rapidly growing Chinese-made artificial islands in the disputed South China Sea, a US official said on Tuesday.

US Defence Secretary Ash Carter requested options that included sending US military ships and aircraft within 22 kilometres of reefs that China had been building up in the disputed Spratly Islands, the official said.

Such a move would directly challenge Chinese efforts to expand its influence in the disputed region by literally adding territory through a massive island-building exercise. Continue reading

The Submarine Race in the Malaccan Strait

Along with the Strait of Hormuz in the Persian Gulf near Iran and Oman, the Strait of Malacca is the world’s most important shipping chokepoint.

Linking the Indian Ocean to the South China Sea and Pacific Ocean, the Malacca Strait is by far the shortest maritime route connecting Persian Gulf energy producers to their largest consumers in countries like China, Japan, and South Korea. Continue reading