JD Vance and Marco Rubio — it’s probably more accurate to say Marco Rubio and JD Vance — successfully headed off a nuclear exchange, the State Department announced on Saturday.
“Over the past 48 hours, the VP and I have engaged with senior Indian and Pakistani officials [and] I am pleased to announce the governments of India and Pakistan have agreed to an immediate ceasefire and to start talks on a broad set of issues at a neutral site,” Rubio said, praising Shehbaz Sharif and Narendra Modi for “their wisdom, prudence and statesmanship in choosing the path of peace.”
Yes, congratulations are surely in order. Islamabad and New Delhi decided not to nuke each other. In 2025, that counts as restraint. “Wisdom” and “prudence,” as Rubio put it.
Dark humor aside, this was the only outcome worth seriously considering, which is why I didn’t bother covering this story. If you’re unfamiliar, suffice to say the alternative to US-brokered deescalation when tempers flare over Kashmir is state-on-state, military conflict — i.e., a shooting war — between two nuclear nations. That’s a non-starter. An untenable prospect for obvious reasons.
But here’s the thing: There were serious doubts this time around as to whether Washington was going to intervene. Donald Trump’s laissez-faire approach to “over there” geopolitical flashpoints and generalized disavowal of America’s global policing role had some observers on edge. Maybe, they fretted, the US had forgotten that this conflict can veer into the irrational absent someone to step between the two sides. The only country capable of playing that role’s America.
I mention this because it’s a real-time, “right now” example of the perils inherent in the US suddenly abdicating with no hegemon succession plan. I talked about this at some length in the latest Weekly. It would’ve been difficult for Xi Jinping to mediate this particular dispute given Beijing’s conflict of interest, and China’s anyway untested as a go-between.
There’s something (a lot) horribly macabre about the notion of America as the guarantor of global peace and security. We’re talking, after all, about a nation with a God-awful post-War track record for ill-advised military interventions abroad. But, that notion’s more or less (less I suppose) true in the sense that American power, hard and soft, serves as an oblivion deterrent.
Global peace and security is a public good and the US is the only nation capable of guaranteeing it. This is, of course, hegemonic stability theory 101. It has its critics, but suffice to say there are far more questions than answers regarding the provision of public goods on a global scale in the absence of a hegemon. It doesn’t help that history’s no guide: The world hasn’t seen an empire on par with America’s since Rome.
You could argue that China’s in a position to supplant the US — to step into the vacuum in the event Trump’s isolationism leaves a void — but as a totalitarian communist dictatorship, Beijing’s seen in the West as an unreliable guarantor, to put it politely.
At the very least, the withdrawal of the US from hegemonic arrangements will make things more unpredictable in the near-term, as the world searches for answers in a post-unipolar reality where it isn’t clear who to call in the event of an emergency. An emergency like this last week’s India-Pakistan flare-up.
Why does the hegemon provide for global public goods? The same reason anybody does anything: Self-preservation and self-interest. If you’re the hegemon in a unipolar world, you want to preserve your dominance and you also want to benefit from your position. So, you create a system of public goods provision that keeps everybody on the dole while accruing to you in various ways.
This discussion strikes at the heart of why some observers are concerned about the dollar. As Deutsche Bank wrote in a now publicly-available piece dated May 1, “the Trump administration’s world view is that for the US, the costs of its provision of global public goods currently outweigh the benefits.” The dollar, the bank reminded market participants, is a global public good.
If “The dollar, the bank reminded market participants, is a global public good.”
Then “If the term-out is into special century bonds as suggested by Poszar, then the funding pressure on the U.S. taxpayer for financing global security is significantly alleviated. The U.S. Treasury can effectively buy duration back from the market and replace that borrowing with century bonds sold to the foreign official sector.
Such a Mar-a-Lago Accord gives form to a 21st Century version of a multilateral currency agreement. President Trump will want foreigners to help pay for the security zone provided by the United States. A reduction in the value of the dollar helps create manufacturing jobs in America and reallocates aggregate demand from the rest of the world to the U.S. The term-out of reserve debt helps prevent financial market volatility and the economic damage that would ensue. Multiple goals are accomplished with one agreement.”
Yeah, tell Zoltan a forced term-out foisted upon some creditors but not others is a selective default.
Guy’s so smart he’s a dumbass.
Also, nobody in their right mind’s going to trust Trump to provide for any sort of collective security in exchange for that term-out. He’s a grifter, and he’s also a coward. That’s the worst possible combination of character traits for this imaginary “accord.”
Finally, those factory jobs ain’t comin’ back. Period.
IIRC, and there is decreasing evidence anyone should have any faith in that, didn’t you discuss century bonds when they started to reappear, both sovereign and corporate? Many wondered why the US wasn’t taking advantage of low LT rates by joining in, and I think you said there wouldn’t be adequate demand, not even close.
Interesting in theory. But ask yourself this – is you were a froeign holder of US treasury debt,.would you ever buy US paper again? And it would have to be lightening fast to prevent existing offshore holders from selling before the mandatorey exchange. Even then, I’d wager our friends on the street would figure out swaps to get offshore holders out, for a modest price, of course.
And then there’s that little issue of whether the US military will acytually show up when you need them, say in eight years….
Everything happening via Trump & Cronies is so wrong. They are destroying world order, they have no clue how it works and is held together. The one place you could attack world order on a grand scale is destroying the US’s role in maintaining and safeguarding. Who’s playing/running Trump? Hard to believe he’s concocted this up on his own. Could it possibly be a confederacy of just one dope?
One dope and his legion of subalterns.
Trump is a puppet and has been controlled/manipulated by the Kremlin since at least the 80’s, but probably farther back. Trump’s mentor Roy Cohn was a KGB asset as well. Trump’s true agency is minimal.