China Threatens Japan Over East China Sea

So apparently if you're a commercial airline outside the borders of China, China thinks it can fire its anti-aircraft missiles at you. I realize that Japanese politicians can be real pricks, and there's potentially oil there, but c'mon.

Investor tip: Watch this story closely. If China doesn't retract this in the next day and a half, expect the world stock markets to drop a couple hundred points each, since threatening Acts of War by the world's manufacturing nation? Things go sideways fast and your Just In Time (JIT) based company that's trading with Chinese firms? You may have delays, and those delays make for failed delivery, broken contracts, excuses of Force Majeur, lawyers, fines, penalties, and all sorts of further badness. Worse, your stock values will decline.

If things go more sideways and the Chinese get their hackles up and blow up a Korean airlines 747 bound for Singapore or Taipei with 348 passengers on board? Well, that's act of war stuff, USA gets involved with our treaty to support them and suddenly we have a good excuse to block all trade with China. That will be expensive thanks to JIT and all the stupid consumer electronics and machine parts made in China while American machinists and assembly line workers sit idle, unemployed.

And keep in mind, China might blow up a Russian commercial airliner, an American or British or French one, even Singapore Airlines flies up there and back. The big guys have nukes and standing armies and battleships and missile cruisers. At what point is threatening to blow up planes that don't radio countries they aren't even passing through a good idea, China? America got hell for that over an Iran jet using the wrong radio band and got shot down after Gulf War 1. Bad deal, major black mark and a lot of dead people. We had nukes, Iran didn't, so that's as far as it went. If that happened today? Much worse. Iran has nukes. China has nukes, Japan has access to ours under treaty, so does Korea. France and Britain and ICBMs armed with nukes. Acts of war can escalate fast.

About the only good news there is most of the radioactive iodine from nuclear fallout is gone over the 10 days of half-lives crossing the ocean to the West Coast of the USA. So if it does escalate, we probably won't die immediately. You may want to give up seafood, however.

It's a terrible thing that we need to seriously consider this outcome. And Investors do. Money comes and goes based on risk, and if the Chinese don't retract their threat, then bond investors will downgrade that market as unstable. The international financial fallout from that will shut down Chinese banking, devaluate their currency, increase interest rates in all loans to China over risk factors and inflation, and basically kill their economic boom. The economic crash that's hit the rest of the world would hit China too. And with them producing most of the world's material manufactured goods? A crash in China means a Dark Age. Note the Capital Letters. It is that SERIOUS.

We really need to stop doing business with China in such a way that we place essential manufacturing in the control of temperamental foreigners with a long history of genocide. Not joking. Feel free to keep them as backup, but have your own at home, just in case things go sideways there and your business goes under without them. Put the machines you need in a warehouse. Maybe even have a skeleton crew trained to operate them and use the team at a loss, as a threat against your Chinese branch trying to up their profits by making you pay more for the next contract. But more importantly, as backup capacity so you'll have delays rather than complete failure and work stopped entirely. JIT is a bad idea if you want longevity.

Too much hinges on the continued sanity of Chinese communist military officials, and stuff like this suggests the sanity is waning. I really hope they retract that statement and arrest and shoot the general making the threats. A few billion lives are at risk for one man's temper tantrum. Seriously.