Monday, May 18, 2009

An increased (though very small) probability for War

Probability of war seems to have increased. It is still small but definitely increased. Though it is unlikely that India will be involved in one (we never invaded any country in 5000 years - so we dont have the mindset) But, look how different war-indicating trends are catching up.
  1. China has more males in its population - typically when the pop ratio gets skewed the chances of war increases. Further, income polarization is very high in China.
  2. Recession will make more people (mainly youth) unemployed and in financially distressed situation - implying combative etc
  3. US-china have classical debtor-creditor problem any strong arm by China will not be taken lightly by US. China believes it may be wronged by the US. If US dollar devalues then you can be sure things wont be easy on this front.
  4. War is by far the biggest domestic stimulus one can give - creates domestic jobs and stuff hence politicians are ok with war in such times.
  5. The typical flash points are visible - Afghanistan Pakistan is now a flash-point. If Us forces are attacked or get in some trouble then we could see drastic actions. Earlier North Korea, Malaysian protests, Demonstrations in Greece were some flash points ( though none as big as Af-Pak)
  6. Religious alignments are getting more stricter - talibanization of SWAT valley in Pakistan is an indicator. To certain degree, Obama election has reduced any polarization along religious lines that we saw earlier in US.
  7. US policies and other global stimuli are going to result in more income polarization. As global inflation strikes the differences will become more evident - I can foresee Mary Antoinette - "if you don't have bread eat cake" statements.
  8. Usually such conditions are off-set by economic growth (that promotes peace) - but that has near about halted in past few months. Now if things do not improve we could be in for much tougher times.
Since last year I have been advising small businesses (even if uncalled for many times - and often at risk of being sounding intrusive) to preserve cash and lower debts. This is time to tighten the seat belts and check the gun in glove compartment for bullets just in case.

So I say it again - better prepared than sorry!