Header Ads

What to expect when you're expecting a new cold qar

February 23, 2021
Bloomberg

This is Bloomberg Opinion Today, a NATO of Bloomberg Opinion's opinions. Sign up here.

Today's Agenda

The New Cold War

Maybe because people of a certain age (mine, roughly) create so much of our entertainment, we never seem to stop reliving the 1980s, like we're a whole culture of Uncle Ricos. And mostly it's fine. "Cobra Kai" is our era's "Anna Karenina," for example, and many of the 47 other '80s-themed TV shows are not terrible, either. The musical influences are tolerable.

The one '80s revival we could really do without, though, is another cold war, this time with China. Unfortunately, as Bloomberg Opinion presciently started warning a few years ago, we seem to be in one.

The outcome of Cold War 2.0, as with Cold War 1.0 and so many other, warmer wars, will be determined by the quality and quantity of alliances each side manages to compile, writes Hal Brands. The U.S. outlasted the Soviet Union partly because it had so many stable, economically healthy democracies on its side. The calculus is a little more complicated this time. Some of America's old allies aren't quite ready to commit to conflict with a rival that has greater economic and cultural influence than the Soviets ever had. 

And though President Joe Biden has ended his predecessor's bullying approach to NATO, the tensions in that alliance haven't dissipated, writes James Stavridis. The group is still fraught with intractable problems, such as its own funding and the seemingly endless engagement in Afghanistan. They can't even all agree on whether China is an adversary yet.

One thing we can hope this new cold war won't revive is the constant threat of nuclear annihilation. I mean, sure, it never really went away, but at least Sting stopped making songs about it. The Trump administration had set plans to spend $500 billion replacing all 400 of the nuclear-tipped ICBMs the U.S. has in the ground, which were old even when Huey Lewis was new. But Bloomberg's editorial board suggests a wiser use of funds would be to upgrade America's more modern nuclear platforms, while working with Russians to scrap old ground-based missiles. Those children Sting sang about are taking over, for better or worse. 

The Future of American Politics

Complicating matters further, America already has a cold civil war happening at home. Unthinkably large swaths of the population believe Biden stole the presidency from Donald Trump, with the help of the Chinese, Hunter Biden's laptop and the ghost of Hugo Chavez. Even church congregations are being torn apart by these divisions, writes Frank Wilkinson.

Republican grownups long indulged these fantasies for electoral advantage but now know they must break with Trump or face eventual annihilation, either of the party or the country or both. Bloomberg's editorial board suggests Democrats can help their rivals transition back to reality by compromising when possible for the good of the country.

Republicans could have joined Democrats in convicting Trump and barring him from future office, but instead they opted to cross their fingers and hope the criminal justice system would do the job for them. They got some good news today in a Supreme Court ruling that the infamously private former president must share his tax returns with the Manhattan district attorney. Tim O'Brien writes the ruling means Trump finally faces the financial exposure he dreads, and criminal prosecution along with it. 

Of course, even when Trump is truly gone, remnants of him will remain in the government for a long time. Karl Smith suggests Biden can use this to his advantage, taking Trump's constructive economic ideas, from industrial policy to pushing for full employment, and making them his own. He'll have more support in his own party than Trump did and can maybe even sway some Republicans to join him. 

To succeed, Biden and the Democrats will need to display a little more hustle. Congress taking a week's vacation in the middle of several national emergencies may have set Ted Cruz up for embarrassment, but it was a waste of precious time, writes Jonathan Bernstein.  

Further Politics Reading:  Republicans should oppose Biden's inexperienced pick to run Health & Human Services. — Ramesh Ponnuru 

Investing for a Post-Pandemic World

This is a grim age for short sellers, and not just because people on Reddit keep ganging up on them. Conor Sen points out that some of their targets, such as GameStop and AMC, were improving even before the r/wallstreetbets circus because the economy seemed poised to recover enough to rescue these struggling chains. And that rebound may be just the start. The previous decade's short bets were predicated on sluggish economic growth. Shorts may have to build whole new models to survive a decade of boom.

Mervyn King suggests such optimism is misplaced, though; all the stimulus flooding the pipeline will misallocate resources and make the global economy less sustainable in the future, he warns. At least the shorts will have plenty more opportunities in such a world.

Further Investment Reading: Muni bonds are even more ludicrously expensive than Bitcoin. — Brian Chappatta 

Telltale Charts

Buying Bitcoin-related stocks is the least profitable way to bet on Bitcoin, writes Tim Culpan. 

Roku is an unexpected pandemic success story, but its future depends on ad-supported streaming, where it has a bunch of competition, writes Tara Lachapelle.

A far bigger problem for Texas than wind power is that it relies too much on natural gas, and increasingly in winter, writes Liam Denning. 

Further Reading

Here's how Eric Adams would run New York City. — Howard Wolfson 

Falling plane parts are not Boeing's fault this time. — Brooke Sutherland

Meghan Markle's victory over a tabloid is a win for the rich and powerful. — Martin Ivens 

Olympic athletes should be vaccinated before Tokyo, and the IOC should help vaccinate more people. — Adam Minter 

Disaster befalls states that don't weatherize, and your house probably has the same problem. — Sarah Green Carmichael 

Before you rush to sell your silver as prices soar, read these helpful tips first. — Alexis Leondis 

You're using the word "Kafkaesque" all wrong. — Leonid Bershidsky 

ICYMI

Oxford and Pfizer vaccines almost eliminated Covid hospitalizations with one dose.

The Pfizer vaccine also appears to stop transmission.

Elon Musk's Bitcoin tweet is costing Tesla.

Kickers

Rare white buffalo spotted in the Ozark Mountains. 

Scientists have cloned their first endangered species, a ferret. (h/t Ellen Kominers for the first two kickers)

Business is booming at Boston's only typewriter shop. (h/t Scott Kominers)

What happened when Earth's magnetic field broke down 42,000 years ago.

Note:  Please send white buffaloes and complaints to Mark Gongloff at mgongloff1@bloomberg.net.

Sign up here and follow us on Twitter and Facebook.
 

Like Bloomberg Opinion Today? Subscribe to Bloomberg All Access and get much, much more. You'll receive our unmatched global news coverage and two in-depth daily newsletters, The Bloomberg Open and The Bloomberg Close.

Before it's here, it's on the Bloomberg Terminal. Find out more about how the Terminal delivers information and analysis that financial professionals can't find anywhere else. Learn more.
 

Post a Comment

No comments

Subscribe to: Post Comments ( Atom )