North Korea’s defiant nuclear explosion and test firing of missiles last week brought the changing global power equations into sharp focus like never before. The US merely mumbled its disapproval incoherently and promptly turned its gaze towards the impending bankruptcy of GM, which it believes would bring life on planet Earth to a standstill. China apparently maintained a stoic silence on Pyongyang’s brazen threats of military action against South Korea, though Beijing did express its disapproval in its own unique way that could only be felt.

News suggesting Pakistan’s nuclear arsenal may be bigger than what was believed came in, prompting Washington to look appealingly at China and Saudi Arabia for some support; it even asked China to provide training and military equipment to help Pakistan counter the militants! The US also ‘asked’ Myanmar to ‘immediately and unconditionally’ release Suu Kyi and Israel to stop resettlement work on the West Bank.

Economic effects of political developments last week included continued weakening of the dollar and, consequently, oil marched past the $65 mark, lifting the ruble, and Putin’s spirits, in the process. France quietly inaugurated its first military base in the Persian Gulf Tuesday, ostensibly to help meet the strategic challenge from Iran but also to sell arms for oil.

Real economies the world over continued to slump. Retail sales in Japan rose in April for the first time in eight months but were still down 2.9% year-on-year, and Singapore and Hong Kong were hosts to an increasing number of idle ships. Lower GDPs in Q1 across continents were confirmed – Mexico down 8.2%, South Africa and Thailand down 6.4% and 7.1% respectively, and Ukraine plunged 23%. Japan's exports plunged 39.1% in April while consumer prices in Singapore saw the biggest ever monthly fall in April. Besides China, perhaps India was the only economy that registered a growth (5.8%) in Q1.

Milk prices in EU and US are down by a third or more as demand for pizzas is down, though demand for burgers is booming; McDonald’s sales and profits are healthy. Even Obama bought only cheese burgers last week, twice, in person, though the possibility of Michelle having ordered some pizzas cannot be ruled out. Why EU and US aren’t recognizing the economic feasibility of shipping some butter and milk powder to hungry millions in Africa, if not Asia, isn’t clear. Incidentally, two dairy farmers in California committed suicide last week, a phenomenon hitherto confined to the developing world.

Yet, the party at the Street was warming up visibly as hands were raised to toast the newly arrived ‘normalcy.’ Steven Spielberg and other Hollywood celebrities paid $30,400 a couple last week to hear Obama compare himself with Roosevelt and tell what everybody else already knew – the US has to work to come out of the ‘cycle of bubble and bust.’

US deficit for year to Sept 30 is now estimated at a mind boggling $1.84 trillion. That New York is still floating in a sea of money is clear from the almost zero yield of 3 and 6 month treasuries, implying that no parking place is considered safe by those holding cash. The dollar is so fragile that 10-year treasuries yield is three times that of short maturity bills.

Greenpeace expects global investments in solar power to leap from $2.8 bn this year to $30 bn by 2015 and the Sun may provide a fourth of all energy by 2050. One sensible thing New York did last week was a ban on cars in certain areas effective last Monday. US wind power capacity has risen 500 percent to over 21,000 mw over the last decade, though that is barely one percent of electricity the country guzzles.

AOL is to hive off Time Warner, Boeing wants new efficiency standards prescribed for airplane designs, British Airways and Air France-KLM reported hefty losses for 2008, Brazilian iron ore producer Vale decided to shun annual contracts and sell only on spot basis, Bank of China is to open branches in Brazil, Deutsche Bahn admitted to having spied on 173,000 employees, Porsche is ‘dialling 911,’ and Microsoft launched its new search engine Bing last week, to search for one fatal flaw that could take Google down. Bill Gates refuses to see the fatal flaw that’s splashed all over www.google.com: the site doesn’t badger browsers with ‘quality’ content that has no relevance to what they wish to search.

Moody’s said the Indian govt didn’t have the ability to help banks the way the US admin has helped American banks, in the event of a crisis. How about a stress test for governments’ ability to help their banks? And pray, why can’t India print rupees, if the US can print dollars?

Interesting new changes are taking place the world over. Since 2004 an estimated 2.5 million Poles have left Poland to find jobs elsewhere in EU (and perhaps the US) while Australians gave vent to their frustration by repeatedly attacking foreign students. The steep 24.5% plunge in global server sales in Q1 notwithstanding, Pentagon is preparing for cyber wars and is even setting up a new military command for the purpose. Is something in the offing?

Between Sep 2003 and Sep 2008 the world lived in a make-believe world and now everybody is frantically trying to sustain the phenomenon somehow. The developing world saved too much, the developed world spent too much, and now the developed world is printing money like there is no tomorrow, to sustain extravagant lifestyles, blissfully ignoring its aging population.

Nobody knows what will happen next. Where does one park one’s wealth? In real estate, equities, currencies, or commodities? What should one do? Buy some gold and Renminbi, and gulp a tin of Red Bull cola that the Germans say contains cocaine, and get on a high. If Obama and Hu Jintao do not know what tomorrow would be like, what can ordinary mortals do?

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