"Para Bellum" | The Agonist

"Para Bellum" | The Agonist

"Para Bellum"

~by Phil Sloan

Para bellum is a noun coined by a German arms maker referring to bullets. However, it is also derived from a Latin adage “Si Vis Pacem, Para Bellum” if you wish for peace, prepare for war. It is this latter context that I write this post. Although I have felt for a while that the winds of war were rising, recent events have sharpened my focus. I don’t wish to say that war is imminent but the likely probabilities have increased significantly. Many of you may say that we are already fighting two wars. That is true, but a broader war encompassing many more nations is now possible.

There are many people that have long followed the theories espoused in the “The Fourth Turning” by Howe and Strauss, or the Long Wave Cycles espoused by Nikolai Kondratieff. I would strongly recommend that you get The Fourth Turning and also read up on Kondratieff. If you have read these concepts, you know that we have entered the Fourth Turning and the winter seasonal cycle under Kondratieff. These are called periods of crisis. During these periods the moods of nations change. Pessimism rises broadly, and the chances for social unrest, revolutions, and wars become reality. At a recent financial conference in New York, the noted market strategist Marc Faber said”You have to prepare for War” He recommends loading the boat with commodities.

Let’s hop around the globe. We all know what’s happening in the Middle East. However, there are undertones that you may have missed. In Bahrain for example, the monarchy is Sunni Moslem and the general population is Shia. Besides the long term hatred of each other this ultimate battle may determine control of oil supplies to the world. Our 5th Fleet is headquartered in Bahrain, therefore making it strategically important to the US. Bahrain is also next door to Saudi Arabia (Sunni) and sixty miles from the largest oil fields in the world. Iran (the world’s largest Shia country and arch rival of the Saudi’s) recently has sent a flotilla to Bahrain, which hasn’t arrived yet. Libya was in advance negotiations with Russia for a new naval base in their country, but that’s now dead. A Russian base in the Middle East would be a problem for us. Russia was also in discussions in Yemen for a naval base. Egypt is still in upheaval. What happens now?

In Europe where we are learning that PIIGS can’t fly, the Greek situation is getting worse by the day. Will the Greek people be willing to accept the austerity necessary? Will the Greek government raise enough money through privatizations? To both I think not. Greece will default, in my opinion. I just can’t predict when. Ireland and Portugal are in the same boat. Not if but when. Spain recently voted to throw their regional bums out. However until the next general election the current prime minister vows to continue his austerity plans. With 21% unemployment will the Spaniards go gently? I think not. What happens to French and German banks that hold boatloads of the debts of these countries? Europe has erupted into war for less in the past.

In South Asia the borders between India and Pakistan are in a constant state of friction. With Bin Laden gone will we go after more terrorists inside Pakistan to the chagrin of their leaders? Recently China gave 50 Military Jets to Pakistan, probably to get port access on the Arabian Sea. How will India react? How will this affect our withdrawals from Afghanistan? By the way, our supply routes to Afghanistan are through Pakistan. The Economist magazine in a recent issue stated that the India/ Pakistan border is the most dangerous in the world. Will Pakistan hold together as a single country or will it break apart into subsets?

In the US the political divide is growing and the rhetoric is getting dangerous in my view. When there have been protests they have been peaceful so far! With the world’s economies slowing down again according to several economists, and the threats outlined above, the outlook for equities is murky at best. In my view this means you should take at least some chips off the table. Remember “Para Bellum”, if you wish for peace, prepare for war.

Don’t forget it’s your Money!