A red dawn over West London
Red East in the morning (the Western World's warning?). Image: Author

Beware Physicists

The last edition of The Perspective Pool was entitled “October Entropy”: the reference was intended as an amusing and somewhat throw-away quip about the significant geopolitical events that seem to be destroying the accepted world order, as “entropy” implies a tendency for order to disintegrate in to chaos (and by further extension that process occurs in a single direction, thereby giving a direction and structure to time). I thought it was a mildly entertaining comparison that would bring a wry smile to those who appreciate such things; in fact I hope it did. However, it also resulted in a number of over-attentive readers engaging me in some very complicated debates on the Second Law of Thermodynamics, which - after a short period of bluffing - I felt very under-qualified to engage in. The moral of the story is “do not meddle in the affairs of physicists”; maybe the other lesson is don’t try to be a smartass…

Record Breaking President Xi

As predicted, the Congress of the Chinese Communist Party anointed Xi Jinping as its leader for an unprecedented (and hitherto un-constitutional) third term. Not only did President Xi take on the mantle of the greatest, and longest serving leader of The Communist Party and therefore of the People’s Republic of China since Chairman Mao, he arranged to have his predecessor, Hu Jintao forcibly removed from the seat next to him on the front rank of the Politburo in full sight of the Congress, and global media. We may think of President Putin of Russia as a “strongman”, but having your elderly predecessor of a decade before carted off for the sin of not being you is more resonant of the glory days of that other great Communist leader, Joseph Stalin. Xi now appears to be unassailable and unimpeachable, with a clear vision of how the PRC will dominate the world, and much greater capacity than ever to do so. As the UK and US were explicit and swift to point out this is very dangerous for everyone else.

Record Breaking Liz Truss

While President Xi was breaking records and brutalizing his opponents, hapless Liz Truss had already resigned as UK Prime Minister, after a record breaking 44 days in office - the shortest since the job began in 1721 - and that is including the 10 days of hiatus caused by the official mourning for HM The Queen. In that short time Ms Truss launched a mini-budget that had not been checked by the OBR, induced a record low for GBP against USD, spiked 30yr Gilt yields (and therefore the cost of Government borrowing) at over 5% for the first time in 20 years, threw the pension market in to chaos, caused the Bank of England to intervene with more QE when its stated objective was to do the opposite, sacked her long-time friend and newly appointed Chancellor Kwasi Kwarteng, made all British mortgages, bank loans and corporate debt more expensive, caused the ratings agencies to put the UK on negative watch and achieved a popularity rating lower than the 10.1% inflation rate.

Chart of 30yr Gilt yields declining in recent days
A Good Thing: 30yr Gilt yields already down to 3.7%, means lower UK government borrowing costs. Image: TradingView

The resignation of Ms Truss caused former PM, Boris Johnson, her immediate predecessor recently removed by his own Conservative party for - in the view of some - his cavalier relationship with veracity, to fly back from his holiday in the Caribbean to assess his chances of a miraculous Lazarine comeback. The Tories came to their senses, and Boris didn’t run, which left the way clear for Boris’ former Chancellor Rishi Sunak to take over. The markets reacted well (look at the chart), but Rishi takes on an unenviable mess of high energy prices, Brexit headwinds and a war in Europe, needlessly made worse by the Truss era. Mr Sunak is British-Asian, and rather more encouragingly for UK democracy amidst the political turmoil the first person of color to occupy 10 Downing Street. Mr Sunak is also only 42 years of age, making him the youngest Prime Minister since Robert Jenkinson the 2nd Earl of Liverpool in 1812 (the year France invaded Russia).

Iran’s One Way Attack Drones

The wave of protests triggered by the death in police custody of Mahsa Amini, a 22 year old woman accused of wearing her hijab too loosely, are entering their sixth week. The Iranian government forces have - according to dissident news outlet Hrana - killed nearly 250 demonstrators in that time, in protests across all parts of the country. On Saturday a huge crowd, estimated to be as many as 100,000, demonstrated against the Iranian theocracy in Berlin (Germany has a large population of the Iranian diaspora, after the UK, Canada and the US). In Iran the demonstrations are predominantly organised by students and younger people; somewhat redolent of the demonstrations against the Communist Party in China in the mid-1980’s; which tragically culminated with the massacre in Tienanmen Square in 1989. Although the Iranian government appears to remain in control for the time being, these demonstrations have achieved a couple of things: (i) greater unity of the notoriously fragmented and often foreign-based opposition, and (ii) an even more negative view of the US, the UK and their allies against Iran: the US Pentagon has publicly confirmed that Iran is supplying “one way attack drones” - miniature modern day “doodlebugs” - to Russia and that it regards them as “militarily ineffective”, although a weapon of terror against civilians. The UK Ministry of Defence said that Iranian Revolutionary Guards were in Ukraine actively training Russian forces, which means Iran is now embroiled in a proxy war with NATO. The theocratic government will come under more pressure internally and externally, and dictatorial countries under pressure - as we have seen in the case of Russia - are capable of making very bad decisions indeed.

Saudi’s MBS allegedly mocks Pres Biden

The Wall Street Journal has reported on the deteriorating relationship between the youthful ruler of the Kingdom of Saudi Arabia (KSA), Mohamed Bin Salman (MBS) and the 79 year old President Biden of the US. According to the WSJ, MBS is alleged to have mocked President Biden’s “gaffes” and “mental acuity”; in private at least, which MBS has denied. This is the latest round of unedifying power politics between the US and KSA centered on the oil price. The US Administration is very frustrated with KSA for its role in the latest OPEC+ decision to reduce the production of oil, thereby maintaining the price, and a direct rejection of President Biden’s request to push prices down made in person to MBS in June. The US Administration says the OPEC+ decision helps Russia, but a cynic would also add that high energy prices add to US inflation - which President Biden said would be transitory and has turned out to be anything but. KSA has also been exporting fuel oil to Russia, which has added to the annoyance in DC. This brings to an end a warm period of relations between the US and KSA, albeit they have to live with each other in defiance of Iran.

And finally..

President Biden welcomed the appointment of the new UK Prime Minister as an “astounding milestone”, although as that clip shows the President may have pronounced him as “Rushi Sinook”, which let the noble sentiment down a little bit, I could not help feeling.

Be good, everybody.

Duncan

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