Is Globalisation Finished?
The world is increasingly moving to a regional trade and security model but will it last
The world has changed. Our post-pandemic, post-Ukraine planet has shifted on its axis and it is likely that we will see the world, our global world, segment. Globalisation will take a step back. We could be facing a new era; a period of regionalisation with clusters of nations unified by trade, security and common values. It appears that economic globalisation is no match for national ideologies.
The early signs are there. The share of new trade between bordering countries saw a significant uptick in 2019 to 18% from the 9-10% seen over the past two decades.
Three driving forces have come together to potentially frame this new order; the Covid pandemic, the climate crisis and the war in Ukraine. A veritable trifecta of ‘happy days’. Footnote: We always said the Fonz would make a comeback.
The Covid pandemic has divided nations along geopolitical lines with China and other countries self isolating thanks to zero-Covid strategies. The subsequent supply chain disruptions have further dampened international trade, fostered economic and industrial independence and boosted isolationism.
As if Covid-19 in itself was not enough. Lockdowns, horrific death rates, funerals and cramped ICUs, alongside illegal partying, endless health statisticians and Amazon making more money out of the whole thing than Tesla, seems sadly to be the least of it.
Apparently Covid’s real sting in the tail is the subsequent supply chain debacle, which could add up to the beginning of the next economic crisis. Stay with me. You see, it seems lorry drivers and truckers (I never quite know if they are the same people) like working from home as well. Apparently the bed behind the drivers seat disguised as a ‘cab’ won’t cut it. You can’t really blame them for that.
And have you tried the average trucker rest facility?
So truckers have joined the great resignation and decided to take Linkedin driving lessons from home. Sales of ‘Dirt Rally’ and ‘Driver: San Francisco’ have gone through the roof. Apparently ex-truckers want to become professional gamers, drone drivers and Amazon delivery folk.
Suddenly no one wanted to drive trucks any more because, hell, DUP delivery drivers are licensed to break the rules of the road - way more fun - and you can sleep in your van or at home, either of which beats even the best truckie layover other than the one my father used to take me to on the road through Tuscany. Have you tasted their Spaghetti al Diavolo?
And whatever truckers still driving are busy parking their trucks in front of bridges in support of the anti-mask people.
As a result no one was out delivering goods or gas or games (which kind of undermines our ‘Dirty Rally’ line, but anyway). And what this did was to make the price of oil go down, because those trucks sure drink a lot. It also made the climate dudes happy for a split second before they went back to reminding us that buying the latest iPhone thingy was pointless because the Amazon (not the one belonging to Bezos) has been hacked back to the point where tipping points and Met office data and Attenborough mixed together tell us it’s all over. Assuming Putin doesn’t get us first.
So the Middle East leaders got together and came up with a clever wheeze. They decided that the best way to avoid ever going to another COP meeting (or is it beating) was to accidentally forget to increase the supply of oil when we started trading our lockdown jim jams for that oh so fun commute back to the office.
As a result the price of gas shot up along with (probably causing) the price of everything else shooting up. The West saw our anaemic savings disappear faster than an oligarch’s boat. Oh and Putin decided a cost of living crisis coming straight after Covid meant the spineless West (partygate anyone) would be on its knees with well-being issues and raising chickens in the backyard. So, an optimal window to go get Ukraine and try to spread bird flu or radiation, whichever came first.
Inflation is the new favoured headline-of-fear right as it looked like we might be over endlessly depressing news about pandemic, famine, Trump Social and war - all of which seem to be ingredients for the cost of living crisis?? OK, so maybe not the Trump Truth Social thing. Not yet anyway. Let’s see what happens after that bubble bursts?
I guess we can blame the truckers for the post pandemic economic crisis? Or are they the proverbial canaries? If that is the case, the key will be not to shout it out too much because that will make them feel even more unloved and inspire more of them to want to stay at home, hiking prices further. And the more inflation goes up the more we’ll no longer be able to trade with anyone else because our prices will be too high and quick as a flash we’ll be back to greasy chips in newspapers and pub lunches straight out of the microwave.
The climate crisis
On top of the pandemic problem, the climate crisis has the developed Northern hemisphere pitted against the less developed, increasingly climate challenged Southern hemisphere. The hotter South blames the fossil fuelled, cooler North for their climate induced social and economic pain. After all it was the Northern countries that made the most money out of fossil fuels, mining and ripping down trees. Here’s looking at you, Jair Bolsonaro.
It is the Southern hemisphere and island nations that are getting whacked the most by heating-without-the-sky-high-energy-bills, wildfire, drought, famine and McDonald’s moving in.
As a result Will and Kate’s jaunts are proving a bit less popular which, let’s face it, must be quite a shock to the system/firm. Will, bless his duchy socks, can’t quite understand why. After all, he launched the Earthshot thing which he thinks will solve the climate crisis while everyone else thinks it's a new alcoholic beverage brand to pay for Andrew’s lifestyle. You know, like booze for Duchy Organics.
This makes the Southern hemisphere want reparations that add up to more than Virginia Giuffre’s backhander. Given that Northern countries are too busy paying for inflation, gas, war and wind turbines it may end up that they’ll never cough up enough and create a permanent rift with the South - unless, of course, you’re talking about Australia who seem to still think the climate crisis is a fake news thing invented by the Pangolins who needed a distraction from getting blamed for Covid.
And climate change was supposed to bring us all together - presumably like rats to a sinking ship.
The war in Ukraine
As if the pandemic and climate change was not enough, along comes Putin. In a mad fit of anger at being challenged by some millennial upstart in a trendy drainpipe suit, the russian leader has concluded that the guy was always going to look cooler than him in the Instagram wars. He needed a new way to get one up on him: blowing him to bits. (Subtlety and snark are for twitter pansies not steroid infused Judo champs.) Unfortunately he is also blowing away everything else that moves or stands or generally doesn’t want to use russian rubles to buy bread.
The invasion of Ukraine has countries divided into three categories. Those fighting Russia with sanctions and the provision of arms. Those remaining neutral and those openly supporting Russia.
This has created three blocks of interest.
There is a block of Western countries that are against Russia, there is a central and Eastern block of neutral countries mostly in the Middle East and Asia and there are a handful of Putin buddies that seems to include China, North Korea, Iran and Syria along with the occasional African despot, Tucker Carlson and die hard Trump supporters oh and Abramovich because nowhere else will repair his yachts.
A trifecta’d regional model!
In this post pandemic, post climate-stuffed and post peace-and-quiet-in-Europe world it looks like whole new trading models could develop. After the current oil shock no one will want to buy oil off the Middle East anymore. Thanks to the climate thing no one will be around to buy Elon Musk’s cars anymore. And thanks to some really incredible advances in smart steering wheels for PC gamers - no one will want to drive a truck anymore.
Saying that, given inflation, no one will be able to afford anything anymore which means we’ll all become farmers and get a cow in our back yard which will tank the stock price of Oatly (that and the fact that they’re ‘shake me’ model doesn’t work given the milk comes squirting out of the not very well sealed top). All these cows farting in unison will get emissions soaring up to the Moon, and shift yet more carbon dioxide from the Northern hemisphere to the South making them have to fight back by pushing tsunami’s north. Starting a new set of eco-wars.
In the meantime, the West will reunite against Putin, while the Middle East looks to Asia for its oil sales and China will grab Taiwan. Meaning we will go after them with sanctions to the point where the West will have to make their own products until it costs too much at which point they will start looking to Mars for cheap labour. Meaning Elon Musk will still get to cash in after we can no longer afford to pay for his cars thanks to inflation.
The silver lining for those of us trying to figure out where to trade in this new new world, will be that at least we will be able to spend a lot less on marketing as the future of sustainability will be to sell to yourself and yourself only. Bye bye ad agencies.
For everyone else, look to where countries stood on the war in Ukraine to try to understand where the next trading blocs might emerge. Sorry Abramovich.
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