Geopolitical sea-change afoot

Reports suggest that China is helping Iran give the US an extra shove out of the Middle East. A US funding crisis and a collapsing dollar surely follows.

First, it was a recommendation by Chinese regulators to banks to lighten up on US treasuries, which combined with a funding crisis in Japan leading to insurers and pension funds under pressure to sell them as well couldn’t come at a worse time for the spendthrift US administration.

Then there are increasing reports of countries switching trade settlements from dollars to yuan, giving the impression at least that the yuan is taking over from the dollar. This is very much a minority activity so far, but the yuan’s trend is clear. It continues to rise against the dollar, which must be a reflection of international shifts in the yuan’s favour, and against that of the dollar. It reflects a currency which shows that China’s leaders are growing more confident of the dollar’s demise.

Furthermore, Reuters reports that China is shipping man-portable air-defence systems (MANPADS) to Iran, which admittedly China strongly denies. If Reuters is right, then this is a minor escalation of assistance to Iran, but significant.

The single most important point to understand is that the US is being driven out of the Middle East and its role as the global hegemon effectively ends. It is the most important signal to the world outside the Americas that for all intents she can be