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Once again, goatherders are showing up Western forces. | How About Those Houthis? Red Sea is now lar
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Once again, goatherders are showing up Western forces. [The Rude Awakening] December 19, 2023 [WEBSITE]( | [UNSUBSCRIBE]( How About Those Houthis? [Sean Ring] SEAN
RING Just close your eyes for a moment and imagine the “War on Terror” never happened. The USG didn’t piss $5 trillion in taxpayers’ funds up a wall. Gas prices are at a level where a $20 bill can get you a full tank of gas. The world still loved and admired America because America wasn’t exporting inflation and “democracy.” America didn’t give in to every Israeli request; there was peace between the US and the Muslim world. OK, you can open your eyes now. The rest of this column will explain what’s happening because the American Military-Industrial Complex couldn’t keep its snout out of the taxpayers’ treasury trough. In short, a bunch of angry goatherders has tied up the Suez Canal, the world’s most important shipping lane and choke point, adding days and millions to the costs of transporting goods across the planet. How’s that inflation looking now? 150 Years of Supply Chain Down the Drain [Zero Hedge]( tweeted:]( Red Sea is now largely closed to traffic. That's 8.8 million bpd of daily oil transit, and nearly 380 million tons of daily cargo transit. Global traffic now will be rerouted around Cape of Good Hope, adding 40% to voyage distance (and even more to cost) [Suez Canal vs] Credit: [@zerohedge]( If you look at the above map, you must travel between the Arabian Peninsula (Yemen) and the Horn of Africa to get to the Suez Canal from Singapore and the East. That waterway is called the Bab al-Mandeb Strait. Let’s get some definitions down first. Bab al-Mandeb Strait: This narrow strait is between Yemen on the Arabian Peninsula and Djibouti and Eritrea in the Horn of Africa. It's a strategic waterway connecting the Red Sea to the Gulf of Aden and the Arabian Sea. Most importantly, it's one of the critical points of access to the Suez Canal, a major global shipping route. Houthi Militants: The Houthis are a Zaidi Shia-led group in Yemen. They have been involved in a protracted conflict in Yemen, which has had regional implications, especially in the context of the broader Saudi-Iranian rivalry in the Middle East. Impact on Global Trade Flows: The Bab al-Mandeb Strait is a critical junction for maritime trade, especially for oil and gas shipments. When shipping companies decide to pause transit through this strait, it can have considerable implications for global trade. Ships would need to reroute around Africa via the Cape of Good Hope, leading to longer transit times and higher costs. This would not only impact but also restructure global supply chains and even contribute to fluctuations in global oil prices due to the delay and uncertainty in oil deliveries. Vasco da Gama is shaking his head right now. Reason for the Pause: The decision by shipping companies to halt transits was primarily driven by security concerns. The Houthi militants' attacks in the area, potentially including missile and naval mines, pose a significant risk to large commercial vessels. The risk assessment for shipping companies involves not only the potential for damage to their ships and cargo but also the safety of their crew. From [The Guardian]( The most immediate effect has been a rise in the cost of insuring vessels that travel through the Suez Canal and Red Sea. Typically, ships must notify their insurers when sailing through high risk areas and pay an additional premium. This risk premium paid by shipping companies was just 0.07% of the value of a ship at the start of December, but has risen to about 0.5%-0.7% in recent days. On Monday, a group of prominent marine insurers also widened the area in the Red Sea they deem to be high risk, meaning more vessels will have to pay the premium. As a result of the cost of shipping goods through the Red Sea has risen by tens of thousands of dollars a week. For most traders however, the risk is too great. In the last week prominent shipping companies including Maersk, Hapag Lloyd, and MSC have decided not to use the Red Sea. According to thinktank the Atlantic Council, seven of the ten biggest shipping companies by market share have suspended shipping in the Red Sea. Some ships are being diverted around the Cape of Good Hope, on the southern tip of Africa, adding up to two weeks in journey time. Lloyd’s of London doesn’t want the risk without massively increasing premiums. In essence, yes, a bunch of goatherders have just stopped world trade. [ Strange and Powerful AI Project Revealed]( Jim Rickards was recently passed some urgent new intelligence involving a $10 million A.I. project…
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[Click here to play his urgent message now.]( [Click Here To Learn More]( Who Are These Friggin’ Guys? The Houthis, formally known as Ansar Allah, are a Zaidi Shia-led religious-political movement that emerged from northern Yemen in the late 1990s. Their ideology mixes Zaidi Shia revivalism (a branch of Shia Islam predominantly in Yemen) with anti-imperialist and nationalistic sentiments. The Houthis initially fought against the Yemeni government during several wars from 2004 to 2010, and their influence has grown significantly since the Arab Spring in 2011. However, it's important to clarify that the Houthis have not closed off the Suez Canal. The Suez Canal, located in Egypt, is a critical shipping route that connects the Mediterranean Sea to the Red Sea, allowing for direct shipping between Europe and Asia without navigating around Africa. The Houthis' area of operation is primarily in Yemen, which is situated south of Saudi Arabia, bordering the Red Sea but not the Suez Canal. However, the canal is effectively closed because you can’t reach the Suez without going through the Bab al-Mandeb Strait. “If Saudi Arabia & the UAE are part of any coalition to attack Yemen, we will not leave an oil field or a gas field in Saudi Arabia or the Emirates, and we will target all ships transporting oil,” [said Mohammed al-Bukhait, senior political official and spokesman for the Houthis](. The closure of the Suez Canal would have significant global consequences. The canal is one of the world's busiest waterways, facilitating about 12% of international trade. A closure would necessitate the rerouting of ships around the Cape of Good Hope, significantly increasing transit times and costs. This would impact global supply chains, leading to delays in goods' delivery, increased shipping costs, and potential disruptions in global markets, particularly for oil and other commodities transported via this route. This also wrecks Egypt’s finances, which I’ll touch on later. A New Coalition of the Willing? From [The Wall Street Journal]( The U.S. unveiled a multinational naval force to protect merchant vessels in the Red Sea after Houthi rebel attacks threatened the Suez Canal’s central role in global trade. On Monday, the Pentagon said it was establishing a security operation to protect seaborne traffic from ballistic missiles and drone attacks launched by the Houthi groups in Yemen. The effort, called Operation Prosperity Guardian, will include the U.K., Bahrain, France, Norway and other countries. Many of the world’s biggest shipping lines, oil producers and other cargo owners in recent days started diverting vessels from the region, prompting a spike in oil prices and insurance rates. “This is an international problem. And it deserves an international response,” U.S. Defense Secretary Lloyd Austin said in Tel Aviv on Monday. [The cradle] Credit: [The Cradle]( Like the Fed rescues the markets, the US military attempts to protect real asset movement. Egypt’s In Trouble From [Reuters]( on June 21, 2023: Egypt's Suez Canal Authority has seen revenues reach a record $9.4 billion in the current financial year, which ends on June 30, up from $7 billion in the previous year, Chairman Osama Rabea said on Wednesday. "For the first time in the canal's history, the authority has achieved revenues of about $9.4 billion," he told reporters. The chairman added that 25,887 ships have passed through the canal so far in the current financial year, the authority's website cited him as saying at the same conference. He said around 23,800 passed through the previous year. For a country with only $477 billion in GDP, this is a decent chunk (about 2%). This situation isn’t Egypt’s fault, but they’re suffering for it. What will they do with the Rafah crossing? No one knows. Wrap Up What a mess! And it shows how genuinely fragile the world economy is, especially at essential chokepoints. What was once taken for granted will no longer be. The bifurcation of the world economy continues. Do you think things are getting cheaper in the future? Think again. This may just sink Biden’s presidency once and for all. All the best, [Sean Ring] Sean Ring
Editor, Rude Awakening
X (formerly Twitter): [@seaniechaos]( In Case You Missed It… Where Marc Faber Is Investing Right Now [Sean Ring] SEAN
RING I enjoyed speaking with Marc Faber on Paradigm Press’ YouTube Channel last week. If you haven’t had the chance to watch it yet, [please head here](. [Click here to learn more]( Before you head over to watch the video, here are some prize quotes from Marc. On Milei, Argentina, and Its Stock Marketsub Well, my best guess is that the stock market will continue to move up for a while, although it is up already substantially from the lows. It's no longer as cheap as it was say 12 months ago. But I think there is some momentum, and as you say, a lot of people believe that things got so bad in Argentina that they can only improve. I would agree that conditions will hardly get any worse, but the program Milei has set up the removal of various agencies, and dollarization are not practical. On paper, they could be realized, but in reality, they won't be realized. And so I think that the initial bout of strengths in the market will be followed by disappointments. How The World Benefits From the Argentine Election I think it's important for the world to have seen in reality how the public feels about their governments. Everywhere in the world, ordinary people are really annoyed by their government officials who are complete hypocrites, who live a relatively comfortable life, take continuously wrong decisions, but nobody's ever penalized for these wrong decisions. You understand? You are a businessman. I'm a businessman. If we make a wrong decision in the stock market, we lose money. The small businessman who has a retail shop or whatever manufacturing company, if he makes wrong decisions, he's penalized by a breakdown of his profits or maybe even through bankruptcy, but he is responsible for his business. And if it's not successful, he suffers. But government officials, no matter how unsuccessful they are, how dumb they are, or how stupid policies they introduced, are never penalized. They retire with a fat pension that the other government officials do, and over time, it increases. So there's no risk for these bureaucrats, and most of the bureaucrats nowadays have not worked in the private sector. I'd like to say they've been to some sort of a university taught by socialists, communist professors in political science. Then they went into the government, but they never worked in a private sector job. And that I object strongly to, and I think as long as we have these bureaucrats running the show, there'll be no economic growth. [Response Requested
1/1000th of an ounce of gold available]( As a Rude Awakening reader, you're being offered a 1/1000th of an ounce of gold when you upgrade your account. It will come in the form of a “Gold Back” - a new type of gold currency that’s starting to spread across America ([click here to view](. If you have not responded to this offer yet, and want to know how to claim yours… Please click the link below for details. [Click here to learn how to claim your new Gold Back Currency<]( Thanks!
Amber Anderson Customer Service [Click Here To Learn More]( Marc’s Travel History and International Diversification I moved to Hong Kong in 1973, and then in ‘73 and '74, the US bear market began, and by ‘74, emerging markets were extremely depressed compared to the US. And they stayed depressed. Hong Kong took off until 1981, ‘82 had a boom, and then there was a property market decline after 1981, but the country did okay between 1980 and ‘89. The market that it particularly well during that period of time was Japan. And then money flowed out of Japan and into other markets in Asia like the Philippines, which was very depressed in ‘84, ‘85… in Thailand, which was also depressed. And then at the end of the eighties, the markets that opened up were India and Indonesia. These were new markets and also China. By 86, ‘87, the Asian markets were expensive, and I predicted the crash. But in 1986 I started to travel to Latin America because, and this is important, I had read a book titled The Economics of Inflation. And here he was an employee at the Reichs Finance ministery in Germany between 1918 and ‘24. He wrote about inflation and the impact of inflation on everything: on society, on the currency, on the exchange rate, on the stocks, and so forth and so on. One observation he made is that in high-inflation economies, stocks tend to become very cheap in real terms because the currency collapses. I always look and calculate in US dollars, because you could have a market like Turkey in local currency, it's up in the sky, but in dollars, it's down. That was the case end of 2021. So in ‘86 Argentina, the total stock market capitalization, there was a large economy and still is a large economy, was less than 500 million USD. The Philippines was at 350 million USD. And so when you look at these things in US dollars, you realize what is cheap. And I traveled to Latin America. The first country I went to was Chile and then Argentina, and then I started to invest because Argentina was really dirt cheap, dirt cheap. So I've been keeping in touch with Latin America and from time to time investments in bonds and stocks. But recently, as I said, I became attracted to stocks because they were very low. Say you look at Petrobras in Brazil, still an inexpensive company, or in Colombia, you have very inexpensive companies at the present time. So that's what I'm looking at. In Asia because of high inflation, the Sri Lankan stock market had collapsed, but now it's also recovered quite a bit. And also Pakistan is very inexpensive relative to the rest of the world. On Gold I would like to answer this question by stating that gold and precious metals are a large position among my assets. So among my assets, I kind of have 25% in stocks, 25% in cash and bonds, 25% in precious metals, and 25% in real estate. It varies a bit roughly, roughly. And so the 25% in gold is very large for me. So in a way, I'm a true believer in gold, But I'm not a true believer that gold will go through the roof because I grew up in the fifties. So in the fifties, if I buy a pack of cigarettes or if I buy a bread or crust or a can of soup and so forth, I know the price in the fifties and I know the price today and I know the appreciation roughly, roughly they'll say 20 times or 10 times. In the case of Switzerland gold in the 50 60 until 71 was $35 an ounce. It's now close to 2000. Is it a bad performance? No, it's kept, its purchasing power. That's what I want to say. It's not extremely cheap and it's not terribly expensive compared to the collapse in intelligence of central bankers. Yes, gold should be at a hundred thousand if you would have an inverse relationship to the intelligence of central bankers. But otherwise, compared to your daily expenses, gold has kept roughly its purchasing power, But I am a large holder and I will never sell my gold. But then we have to address the question, where do you hold gold and will the government take it away from you one day? And then you understand this is another issue. It's like real estate. Do you own real estate in the city centers or do you own real estate in the countryside? All different stories, but I believe that gold mining shares are today incredibly low compared to the price of gold. You understand? We can establish ratios going back to 1960. So in 1979, gold shares were high compared to the gold price. Now the gold price is high compared to gold shares. Absolutely. It's like real estate. Hong Kong properties are now, the properties are not particularly cheap, but they've come down. But the property stocks sell at 70, 80% discount to the asset value. Wrap Up Marc’s knowledge and wisdom come to the fore in this great chat. [Head over to Paradigm Press’s YouTube Channel to watch this wide-ranging interview right now.]( It’s a great way to supplement your knowledge and get a firsthand look at what one of the investing masters is doing right now. All the best, [Sean Ring] Sean Ring
Editor, Rude Awakening
Twitter: [@seaniechaos]( [Paradigm]( ☰ ⊗
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