The nature of warfare has changed, the financial system is being armed: Gavekal Research Report

In times of drones and parallel financial arrangements, there is no longer absolute power, nor the perception of absolute power. /Representative Image | Str/Xinhua

The nature of warfare is changing and the financial system has been armed like never before, although so far this has not produced the intended results, investment research firm Gavekal Research said in a report.

At this point, investors can take one of two attitudes – the first could be described as “nothing to see here; carry on”, and the second is to accept that the world is changing rapidly and that these changes will have profound lasting effects on financial markets.

Russia’s invasion of Ukraine could tell the world that the unipolar age of modern history is finally over, it said.

As large as the Russian army and as powerful as the US Treasury, the current crisis has shown that none of them are powerful enough to impose their will on their perceived enemies.

“This includes relatively weak enemies; the Ukrainian army was hardly considered formidable, while Russia was considered a financial pygmy,” the report said.

In times of drones and parallel financial arrangements, there is no longer absolute power, nor the perception of absolute power.

“The pot was called, every player had to show their cards, and everyone is sitting with broken flushes!

The report goes on to say that emerging market workers have been subsidizing consumption in developed markets for about 25 years as emerging market policymakers kept their currencies undervalued and converted their current account surpluses into “hard” currencies.

If this agreement ends now, the consumer in the developed world will struggle while the consumer in the emerging world will thrive, he added.

(With input from IANS)