Global Macro Monitor

We posted the following in July after President Trump threw Montenegro under the bus.

Taiwan may be about to get hot, hot, hot in the next year after last night’s Commander in Chief’s ambiguous message on defense treaties.  – GMM

U.S. To Send Warships Through The Strait, Again

Yesterday,  Zero Hedge posted a great piece,  In Latest Provocation To Beijing, US Plans New Warship Passage Through Taiwan Strait,  bringing to our attention the following Reuters article,

The United States is considering a new operation to send warships through the Taiwan Strait, U.S. officials tell Reuters, a mission aimed at ensuring free passage through the strategic waterway but which risks heightening tensions with China.

The United States is considering a new operation to send warships through the Taiwan Strait, U.S. officials tell Reuters, a mission aimed at ensuring free passage through the strategic waterway but which risks heightening tensions with China. – Reuters

John Bolton’s Fingerprints 

The show of force by the U.S. in the Taiwan Strait appears to be a hardening line against and challenge to President Xi’s One China Policy and has National Security Adviser,  John Bolton’s fingerprints all over it.

Bolton has close professional and personal ties in Taipei . According to an investigative report by the Washington Post ( April 9, 2001 ), Bolton was on the payroll of the Taiwan government before joining the Bush administration. Bolton received $30,000 for “research papers on UN membership issues involving Taiwan ” at the same time he was promoting diplomatic recognition of Taiwan before various congressional committees.

In 1999 Bolton, speaking as an AEI scholar, said that “…diplomatic recognition of Taiwan would be just the kind of demonstration of U.S. leadership that the region needs and that many of its people hope for.  The notion that China would actually respond with force is a fantasy.” Bolton joined a prominent group of neoconservatives and traditional conservatives who signed a statement jointly sponsored by the Project for the New American Century and the Heritage Foundation that lambasted the Clinton administration for its failure to offer unequivocal support of Taiwan .   –  Counterpunch

Sum Of All Fears

The Sum of All Fears, at least ours.

A neocon chickenhawk driving  U.S. foreign policy, provoking an emerging China, in an area they consider one of the highest in the country’s national interest.

Moreover, this is happening at a unique and critical period in world history,

The defining question about global order for this generation is whether China and the United States can escape Thucydides’s Trap. The Greek historian’s metaphor reminds us of the attendant dangers when a rising power rivals a ruling power—as Athens challenged Sparta in ancient Greece, or as Germany did Britain a century ago. Most such contests have ended badly, often for both nations, a team of mine at the Harvard Belfer Center for Science and International Affairs has concluded after analyzing the historical record. In 12 of 16 cases over the past 500 years, the result was war. When the parties avoided war, it required huge, painful adjustments in attitudes and actions on the part not just of the challenger but also the challenged.  – Graham Allison, The Atlantic,  Sept 2015

We also don’t think the timing of the leak to Reuters was a  coincidence,

Protesters chant anti-China slogans on Taipei march in first large-scale rally pro-independence rally in decades.

Thousands of people have rallied in Taiwan’s capital to call for a referendum on independence, in the first major protest calling for a popular vote since the self-ruling island became a democracy more than 20 years ago.

The march on Saturday through Taipei took place as China has stepped up its claims to Taiwan, which Beijing considers as part of its own territory.
– Al Jazeera, October 20th

Are you freaking kidding?

We suspected the doctrine of  Strategic Ambiguity with Taiwan died when President Trump hedged about coming to the defense of a NATO country if it were attacked,

Tucker:  So membership in NATO obligates the members to defend any member that is attacked.  So let’s say Montenegro, who joined last year,  is attacked, why should my son go to Montenegro to defend it from attack?

President Trump:  I understand what you are saying. I have asked the same question. You know Montenegro is a tiny country with very strong people… They may get aggressive, and congratulations you are in World War III…But that is the way it was set up, don’t forget I just got here.   – GMM,  July 2018

But to be replaced by a doctrine of direct provocation with China, based on a bet President Xi is a Paper Tiger on Taiwan?   A crazy, dangerous gambit, in our opinion, and one that could easily be dismissed if not for the future of the world depended on it.

Extending President Trump’s logic above, we asked back in July,

“Why should my son go to Montenegro Taiwan to defend it from attack?”

NFW will the American public send their sons and daughters to fight World War III over Taiwan.  President Xi knows it, and President Trump effectively stated it in his interview with Tucker Carlson back in July, at least, that is what he seemed to imply.   The probability for a fatal miscalculation is now higher than ever.

Danger, Will Robinson!

Here’s to hoping, and praying,  John Bolton has recalibrated his China will “respond with force is fantasy” view.   And, especially,  that Defense Secretary, James  Mattis, remains in the administration.    Mr. Bolton is a known bully, possibly the force behind the resignation of U.N. Ambassador, Nikki Haley.

It was reported he even  threatened a Brazilian official in the diplomatic scrum leading up to the Iraq War,  “We know where your kids live.”   How we long for that National Security Adviser who dresses like a “beer salesman.”

Let us rephrase and state it again, Taiwan is getting hot, hot, hot,  and we doubt President’s Trump and his new BFFS, President Xi, can patch this one up over a few diet cokes.

On Your Radar

Watch this space.

The world and market is asleep  in deep, deep hibernation at the wheel on this one, folks.

We leave you with this fantasy,

We are confident that Saddam Hussein has hidden weapons of mass destruction and production facilities in Iraq.  – John Bolton, 2002

Update:

Run, don’t walk, to today’s South Morning China Post’s piece,  TAIWAN’S COSYING UP TO TRUMP COULD SPARK A CHINA-US WAR,

This is not the first time Taiwan has become a central issue in US-China relations. In the 1960 US presidential debate, John Kennedy and Richard Nixon traded barbs over whether America should launch a nuclear war against China to protect the tiny islands of Matsu and Quemoy, or Kinmen, in the event of a communist invasion.

Trump might now see Taiwan as an increasingly valuable point of leverage over China, but Beijing will make no compromise on this politically most sensitive issue as it considers Taiwan a “core interest”.

As the US and China drift dangerously towards direct conflict, Taiwan should be cautious. The narrow Taiwan Strait could be the flashpoint that sparks war between the world’s most powerful nations. – SCMP

Update: