By Michael Every of Rabobank

There is some irony that this Global Daily author, who has written about geopolitical events such as drone incursions into Europe regularly, was trapped in Munich airport on Friday night by what were reportedly military reconnaissance drones; had to sleep on the floor with 3,500 stranded souls like a scene from a zombie movie; was rerouted via other destinations so the door-to-door journey was 42 hours; and had his suitcase lost by the airline on the way out AND on the way back. However, it underlines anyone thinking current life is ‘normal’ is living in a bubble.

Europe, for all its talk, seemingly has no way of dealing with these drones. Whose are they? We don’t know. Why are they not being shot down when spotted - a lack of ammo or a lack of will? We don’t know. Given that the plan for an EU ‘drone wall’ was shot down immediately as unworkable --which it is given the scale of territory involved-- what is workable and allows people to work? Logically, without a plan we can expect more flights to be disrupted, with a growing economic impact.

Meanwhile, the world around us is in equal flux - but with some plans, both good and bad.

President Trump told CNN that Hamas faces “complete obliteration” if it refuses to cede power in Gaza, saying he’ll “soon know” if the group is serious about peace. Negotiators meet in Egypt today, so fingers crossed. Trump also reportedly Israeli PM Netanyahu to “take the win” and not to always be “so f***ing negative.” Either more massive violence or a sudden peace looms there – and both could prove transformative. Europe is merely an observer either way.  

There are unsubstantiated reports that China is providing Russia with satellite information to allow it to make missile strikes in Ukraine. Would that be a red line for Europe, or do European red lines there echo those of its policy over drone incursions?

The recent 100,000 SIM card plot to disrupt telecoms in New York around the UN general assembly was even larger than thought, says the US ABC, as it included New Jersey. Despite this being something which only a state would be capable of doing, and which only a few states would have even attempted, it isn’t being mentioned much by the media, either in the US or Europe.

Latin America remains on edge as the US Monroe Doctrine returns in force to push back against entrenched Russian, Iranian, Hamas/Hezbollah, and Chinese influence and whispers are that a move against Venezuela looms. Europe thinks an FTA with Mercosur is some kind of answer.

In Africa, ‘Trump’s peace hopes for Rwanda-Congo face threats’, says The Hill. Other locations also look concerning.

In domestic politics, the FT reports “enormous fear” given Trump’s threats against Soros and the non-profits sector, while a judge temporarily blocked the president from sending National Guard troops to Oregon.

In France, as he appoints new government ministers, PM Lecornu “tries to save skin by ruling out use of constitutional backdoor”, according to Politico; that’s as EU Commission President Von der Leyen faces another EU parliament confidence vote debate today.

In the UK, the government is considering banning repeat public protests; foreigners will be banned from claiming benefits, says the opposition Tory party, following the lead of Reform UK and Trump; yet Reform is seen likely to raise Kent council tax after its cost-cutting drive faltered, says the FT, showing there may be no way to cut spending in the UK, like the US, with the looming November national budget all about how much taxes rise, and on whom.

Japan’s first female PM, Sanae Takaichi, has already seen equities soar and 40-year bond yields do the same. She is seen as an Abe- or Trump-like figure, but with inflation now back, the BOJ slowly hiking, and the Yen nearly double the level vs the US dollar that it was when Abe launched his ‘three arrows’ well over a decade ago -- and the US unhappy about currency devaluations-- to say nothing about Japan’s domestic political dynamic, what is the plan?

In geoeconomics, it’s clearly protectionism and barter to avoid the weaponization of the US-centric financial system. For example, ‘China hawks grow queasy over Trump’s push for deals with Beijing’, says Bloomberg; ‘“Worse than Trump’s tariffs”: EU steel protections poised to pummel British industry’, adds Politico; ‘Chinese cars for Iranian metals: how sanctions revived barter trade’, notes Bloomberg; and ‘How China secretly pays Iran for oil and avoids US sanctions’, from the WSJ shows a “Hidden arrangement secured by prominent Chinese insurer connects Tehran with its biggest customer”.

Put that all together and we see that ‘America is now one big bet on AI’ (FT) as “It’s seen as the magic fix for every threat to the US economy.” Indeed, ‘Elon Musk Gambles Billions in Memphis to Catch Up on AI’, says WSJ, where “the city is divided over the massive power and water demands.” China is obviously all in in its own way. Naturally, the ‘EU pushes new AI strategy to reduce tech reliance on US and China’ (FT), with a plan for “digital sovereignty” – just without any of its own AI giants or the cheap energy needed to power it, and alongside rearmament and other acronymic wish-lists.

As a senior Wall Street figure just noted current AI mania only had bubble-like qualities, one might say what we currently have instead is merely ‘sparkling malinvestment’. Yet looked at politically, AI is a double-or-quits bet on a way to get us out of our current structural morass -- while destabilizing society in the process, warn some. And looked at geopolitically, it’s about the military: get military AI working properly and all bets are off. In fact, if one were deeply cynical one could argue regulators are happy to overlook wild market pricing at the moment in the pursuit of a private sector driven Manhattan Project.

Trying to some things up, Foreign Affairs magazine just published ‘Reading Schmitt in Beijing’, which argues the US drift away from both neoliberalism and liberalism mirrors its focus on China. Indeed, and that’s something I’d predicted as far back in late 2017: clearly think tanks and academics aren’t about their speed of thought.

Markets, once they finally get the gist of something, act much faster. For example, the main FT headline at the time of writing was all about gold: ‘‘Gold-plated Fomo’ powers bullion’s record-breaking rally’, as “Price has rocketed nearly 50% this year, its best performance since 1979, as institutional investors pile in”. Bitcoin is also back a fresh record high. I wonder why – and it isn’t all about “rate cuts!”, even if they do play a role in it.

Really, there’s nothing like a forced night’s sleep on a cold, hard airport floor to sharpen your focus on how the world actually works right now. If you still aren’t seeing it yourself, I suspect you may also get to experience it, or its equivalent, in the not-too-distant future.

Pack a spare blanket and toothbrush.