Friday, June 12, 2009

The Post-Recession Geopolitics, Trade, and Global Guerrillas

Galrahn of Information Dissemination posted a great speech by Stephen Carmel, VP of Maersk. Mr. Carmel talked about how interconnected we have become as a world, and how mundane activities in Bolivia and Africa, for example, have global, economic, and strategic repercussions.

For example, he mentioned that the electric/hybrid car is all the rage in the United States, right now, which is a good thing [Oil and all that.] Electric cars use lots of lithium batteries. 40% of the world's lithium supply comes from Bolivia, and much of the rest in other Latin America countries. Bolivia's president does not like the United States much. He is also facing economic and political unrest in Bolivia. In comes the mining industry. Because the government there is not very effective and plagued by corruption, the mining companies pay bribes and fund private security, company town's utilities, etc. Essentially, the mining companies maintain stability at the mines by exporting instability to the rest of the country, in the form of bribes, prostitution, alcohol problems (of transient miners), resentment of non-accountability, etc.

We then will re-ignite a Maoist movement in the country against foreign domination. We will try to prop up the government there, because lithium is now strategically important to the United States. It will be Banana Republics all over again.

Another big point he made is the bottlenecks in our global supply system. In addition to the physical bottlenecks like the Malacca Strait and Hormuz Strait, there's also the capacity bottlenecks of Ports of Los Angeles and Hong Kong and railroad systems, the information bottlenecks of the undersea fiber optic cables, network-node bottlenecks of our power grids, etc. The Just-In-Time philosophy of capacity over-utilization has taken out the slack in our global economic system. This tautness made our system vulnerable to Global Guerrilla attacks, and magnifies the effect of the attacks on our economies.

The speech is long, and full of interesting reflections. It's a must read for anyone thinking about the future.


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