I do hope you haven’t opened this piece at meal time – it’s an unattractive title, I know.
Over the most recent days in the south of England, we have experienced unusually high temperatures. If I say 85˚ Fahrenheit where I live (29˚ Centigrade) and a peak of 95˚ Fahrenheit in Kew Gardens in London (that’s 35˚ Centigrade), most of you will not be unduly shocked. Indeed, the Richard Sexton of the 1980s and 1990s would wonder why I even mention the temperature. Of course, back then, I was (a) younger and (b) acclimatised to life in the South West Pacific and the Arabian Gulf, where temperatures come down to these levels during their winter.
But little of Britain’s infrastructure (houses, cars, trains, offices) was designed with such temperatures in mind and we Brits just ain’t used to them! We dig out our ‘summer’ clothes from the back of the wardrobe where they were thrown after last year’s holiday in Greece. We persist in standing outside pubs, (in the sun), necking fizzy beer, braying to our mates how much ‘worse’ it was when we went to [insert foreign holiday destination of your choice]. Our pale skin goes red. Then much redder and peels, leaving our necks and faces looking like the frayed edges of an old sofa. If we are fortunate, that’s all that happens. If not, we risk triggering dangerous skin cancers.
I apologise again for these unappetising images.
To make amends, I am delighted to tell you that several of our courgette plants have survived infancy and youth and are now about to produce fruit. This recent heatwave has produced what you see below. The gastropod ravages of 2025 did not happen this year. We worried throughout March and April that downpours would bring forth a massed assault from over-wintering slugs. But the only results of so much rain were large patches of moss on our lawns and the annual hose-pipe ban from our supplier of drinking water. One is logical, the other isn’t.
These are the most advanced courgette plants. Note the netting, intended to dissuade neighbourhood cats, many of which regard our veg patch as their personal night time toilet area. Does netting confuse slugs in the same way as ‘Monkey Puzzle’ trees are supposed to confuse monkeys? Somehow I doubt it.
My tiny speck of environment within our geopolitical universe is doing well enough, thank you.
But the wider portion ain’t. The so-called ‘Rest of the World’.
A new version of the Ebola virus has begun its march in parts of the Congo. Cultural behaviours in the region promote spread and resist medical treatment, both preventative and to cure.
The Russian invasion of Ukraine now resembles Round 9 of a heavyweight boxing contest in the lower reaches of the sport.
Israel’s far-right ruling party continues to find ways to take military action against Lebanon and Palestine, insisting they are defending themselves against groups like terrorists Hamas and Hezbollah. Can Netanyahu put off the autumn’s elections when his unpopular coalition may lose power and he himself will have to face charges of breach of trust, accepting bribes and fraud? He is also wanted by the International Criminal Court for charges of war crimes – using starvation as a weapon of war and deliberate attacks on civilian populations. But says he doesn’t recognise the I.C.C.
Populist governments which cut taxes and spend more at the same time are causing long-term damage to their economies. Most of the people love it, because stock markets rise in the short term. But bond markets know differently: their governments are kicking the economic can down the road. If you spend more and earn less, sooner or later, your debt burden rises to such an extent it becomes unmanageable. Consider the United States of America. Recently, its national debt exceeded $39 trillion. This figure is bigger than the country’s entire economy. More than $1 trillion goes in interest annually. That’s more than what is spent on scientific research, education and infrastructure put together. Much of the fresh borrowing is to pay interest on older debt. Does that sound wise to you?
National debt topped the U.S. economy twice before – once during the second world war and again during Covid. And at around 120% of Gross Domestic Product, America is still well shy of the economic gymnastics ratios of, say, Japan at 250% (figures from the International Monetary Fund). But it is noticeable that 10- and 30-year U.S. Treasury bills have resumed their rate climb.
In August, 2020, the 10-year was at 0.65%. It’s now at 4.5%.
At the same points in time, the 30-year was 1.36% and has risen to 5%.
About a third of this debt is held by overseas investors, primarily China and Japan. I’ve reported before that Japanese pension funds have quietly begun dumping US debt. But are we comfortable that China is so prominent a player? And, to return to the relatively short-term stock market gains characteristic of this sort of economy management, rises in the S&P 500 and NASDAQ indices owe most to tech and communication stocks. Remove those and they look lacklustre.
Which country is the US’s biggest A.I. competitor? Yup – China.
If China were to shed US treasuries quickly, no doubt its currency would become more expensive, impacting China’s exporting ability to the US and elsewhere. But in recent years, it has quietly redirected its sales from the US in favour of Asia, Africa and the Middle East. This action makes it less vulnerable to western economic retaliation – like imposition of Tariffs. There has been something of a trade war between these two countries since 2018 or earlier. No doubt it will carry on. But the impact of western tariffs on China is being ameliorated. China’s holdings of US treasuries are the lowest they’ve been since 2008.
America is spending, spending, spending on its war of choice against Iran and perhaps fancies having a pop at Cuba too. Munitions are being expended much faster than they can be made. Most of the world is feeling the effects of closure of the Strait of Hormuz – higher prices across the board – including for Americans, of course.
My guess is that China is biding its time until America is so weakened, economically, militarily and morally that it can contemplate action against Taiwan – which has existed as an independent nation for years, bolstered by annual assertions of support from the US. Except this year.
Keep an eye on the bond markets, folks. They’ll give you the most accurate guidance.
Back in my own tiny speck of existence, are the slugs biding their time too? Sweating it out through the hottest weather ‘since records began’? (Sorry for the cliché). (And the image)!
My bet is China will take Taiwan, too.