Diners at the Bizzy Bee were debating world events and March madness when someone mentioned that the circus was coming to town.  Sally suggested they should all watch the world from the perspective of a three-ring circus.

Dempster jumped right in, suggesting animals for each ring: tigers in one ring (representing the Pacific Rim), bears in another (representing Russia) and lame ducks and ostriches for the center (symbolizing Washington).

Oscar said, “Remember what Pogo said many years ago? ‘We have met the enemy and they are us.’ By looking to the past, we can see the future. Human nature, a nation’s history and religion will usually provide a window into how people or a country will behave in the future.

Human nature does not change, so every few decades economic and political events tend repeat themselves.  Two reoccurring themes are debt bubbles and adversaries’ actions, based on perceived weak-nesses or arrogance and assumed behavior.

The March 19 issue of Investor’s Business Daily (IBD) included an article that outlined Russia’s history. The article included a piece about Marquis de Custine, of France, who went to Russia in the 1830s, expecting to love the autocratic czarism. What he saw repelled him. He returned to France and wrote about what he saw in the culture of Russia, much like the way Alexis de Tocqueville wrote about American culture. (See page 2 for their views of the two countries. The life and more quotes of de Tocqueville are on the website.) What both men saw in the 1830s is still true. De Custine said that Russia and America would lead the world.

The IBD piece noted, “Russia sees itself as the original guardian of Christian civilization, the nation that rushed to the rescue of Constantinople, then under Muslim siege, before its fall in 1204, while the West did nothing.” Defending Christianity has been the rationale for Russian invasions to its south including their 18th-century Ottoman land grab.

Putin is personally upset about the West winning the cold war and would like to avenge this perceived wrong. He is not likely to be concerned with photo ops and a bad economy. Rather, he is likely to act differently than Washington assumes and that could lead to unforeseen troubles. We need to remember Russia’s ruthless history and mission.

We think China may be sensing opportunities from weakness in the West. China is increasing its military power and showing it off around the Pacific.

In 2001, China signed the Shanghai Cooperation Organization (SCO) a military treaty with Russia.

The treaty, designed to fight regional terrorism in Muslim Central Asia (including China and parts of the former Soviet Union) has evolved into an alliance to keep U.S. interests out of the region.

China is a creditor nation and when its economy slows, can cause problems for the rest of the world.

The center ring has at least two performances in the same ring:  the White House and the Federal Reserve. The shows explain how the Fed unwinds its quantitative easing without causing major economic disruptions and a White House that has an appearance of weakness by cutting the military and not carrying out what it says it will do. The White House also expects world dictators to behave according to White House standards and assumptions.

The Fed needs a stable, growing economy to pull off their trick while the actions from Putin and China (in response to perceived weakness), are quite likely to cause economic and financial disruptions that hurt the Fed’s chances of an easy exit.

Washington assumes economic sanctions will force Putin to stop his escapades. That is possible but it is also possible that Putin will continue his military moves, leading to a series of events that hurts everyone.

Hetty said, “We may have many serious problems, but de Tocqueville was right that the United States can repair her faults. Energy can fix many of our problems and perhaps Putin is providing the wake-up call and incentive for America to get its political and financial house in order.”

Hetty added, “LNG and oil exports could help put the U.S. on an economic growth path and renew the world’s faith in America.” A little cheer went up from everyone at the table.

Sally realized that the world really is like a three-ring circus. She smiles, “It has a lot of thrills, chills, tears and laughter.”

However, when the show ends, people go home happy and the circus moves to the next town where they entertain a completely new audience.