America is facing its greatest test in our history. The only question is whether it leads to a catastrophe from which we never recover, or whether we can rise to the occasion and start to make smarter choices in how we engage with the world. That would give us a fighting chance at ultimately regaining some of our former luster. But it’s very late in the game – meaning that it’s too late to escape scot-free.
In other words, over the near to intermediate term, we’re in for very turbulent times. For investors, it might feel like being caught in an endless field of quicksand. Among other consequences, I believe that a major and extended market crash is inevitable. Will it be 60%? 80%? Again, it will depend on the choices being made by our leaders.
A recent front-page article in The Wall Street Journal provides crystal-clear evidence of the challenge. But at the same time, in my mind, it offers a kernel of good news, a ray of hope that we may avert the very worst outcomes.
The article was headed: “How Chinese Hackers Graduated from Clumsy Corporate Thieves to Military Weapons.” The subhead elaborated: “Massive ‘Typhoon’ cyberattacks on U.S. infrastructure and telecoms sought to lay groundwork for potential conflict with Beijing as intruders gathered data and got in position to sow chaos.”
The article began by noting that in the fall of 2023, Jake Sullivan held a secret meeting with various communications and technology executives in which he informed them that “Chinese hackers had gained the ability to shut down dozens of U.S. ports, power grids and other infrastructure targets at will.”
It continued: “What no one at the (2023) briefing knew, including Sullivan: China’s hackers were already working their way deep inside U.S. telecom networks, too.”
There is no indication that we have any ability to stop the ongoing attacks. Effectively, the Chinese control much of our vital infrastructure. They have the ability to obtain communications among political leaders and possibly to disrupt military plans.
It’s shocking – but if you’ve been reading my previous writings, it might not be all that surprising. For years I’ve been warning that in virtually every critical technology, from material sciences to STEM, the Chinese have a massive lead. Even in A.I., according to Eric Schmidt, who captained Google during its years of greatest growth, the Chinese have a major edge.
In 2021, I noted our vulnerabilities when Nicolus Chaillan quit his job as head of cybersecurity for the Pentagon in despair over our government’s fecklessness. In an interview with The Financial Times, he said: “We have no competing fighting chance against China in 15 to 20 years. Right now, it’s already a done deal; it is already over in my opinion,” adding that there was “good reason to be angry.”
So how on earth do I perceive any good news in the WSJ article? It’s in the fact that the article was published at all. That suggests that the powers that be in this country may finally be facing up to our decline and vulnerability and the loss of our exceptionalism. After all, the first step in getting better is admitting something is wrong. It’s an open secret that U.S. mainstream news is essentially a tool of the government. When Chaillan quit his job, I didn’t see his ominous words reported in any major news outlet here. (The Financial Times is British.)
Even with the WSJ article, though, it was somewhat discouraging that it wasn’t picked up by the YouTubers I follow, who generally have been telling the truth about the world’s geopolitical situation. I am speculating that not everyone was happy to read the WSJ article. Furthermore, I would bet that the genesis of the article came from the incoming administration, while the next-day opposition came from the current administration that is leaving office. That’s also part of the good news. While Trump has named a number of China hawks, such a Marco Rubio, to key foreign policy positions, Elon Musk appears to have a major say in foreign policy. And Musk has a lot to gain personally from cooperation with China. if you look at the spectacular rise in Tesla stock, you will see that the lion’s share of the gains came after Musk established a major presence in China.
I have no reason to believe that Musk and Trump don’t care about cooperation for its own sake. But if, from whatever motives, they put us on a path to cooperation, it’s really all that matters. Because the one certainty is that failure to cooperate will doom us to second-rate status and very hard times for as far as the eye can see.
