Beijing and Taipei’s Conflict Could be the Most Worrying Black Swan Event

According to media reports, Alan Greenspan, the former chairman of the Federal Reserve, said on January 3rd that apart from the unpredictable COVID surge and financial markets, the black swan event that the world should worry most about is the outbreak of some form of conflict between Communist China and Taiwan. Greenspan noted that Xi Jinping has been methodically consolidating power, making himself essentially president for life. Xi, who has been quite open about his intention to eventually bring Taiwan back, may be starting to feel that this window is closing. Greenspan said he would bet that Xi Jinping would see it as a blemish in Xi’s legacy if Xi did not invade the Island. Taiwan has shown no willingness to acquiesce to Xi’s plans, so the conditions are there for some type of conflict in the near future. The amount of world trade currently flowing through the region, and the amount of chips being made by Taiwanese companies, means any conflict could become a potential nightmare. Greenspan also considered a U.S. recession as the most likely outcome as the Federal Reserve tightens monetary policy to curb inflation.

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