Iliads and Odysseys - Ruffer Review 2026

THE BREAKDOWN OF PAX AMERICANA HAS ACCELERATED. HARD POWER MUST NOW BE REBUILT FASTER BY HITHERTO COMPLACENT STATES.

But a world of Achilles heels and Trojan horses makes this particularly challenging. And not everyone has got the memo. Amidst so much uncertainty, an Odyssean approach can help investors.

ALEXANDER CHARTRES

Fund Manager

This article was written before the outbreak of the Iran War, which has only reinforced many of the views expressed in it. For ancient Troy and the Dardanelles, read modern Tehran and the Strait of Hormuz.

PART I THE ILIAD

RIP Pax Americana, 1945-2025. Its breakdown, the (re-)emergence of its successor regime and the investment consequences have formed the central thread of this column since the first Review heralded the coming New World Disorder. But 2025 marked the point when the reality of this breakdown became inescapable.

What does the new regime look like? Look around. More volatile. More multipolar. More explicitly imperial. The spectre of the mushroom cloud looms larger again. It blends generational upheaval in world order, politics, technology, culture, demography and energy – simultaneously. After an era optimised for capital, the strongest currency is hard power, from energy and metals to semiconductors and armaments. It is a world of weaponised interdependence, of Achilles heels and Trojan horses.

Homer’s Iliad is a dramatic episode during the Trojan War and the breakdown of one era. But who – in Homeric tradition – conceived the horse which broke the strategic stalemate? Odysseus, King of Ithaca, master of metis (cunning intelligence).

Post war, Odysseus sails home to Ithaca, a journey which took ten years and all his guile.

We live in epic times. The next decade could well be amongst the most consequential in recorded history as the Big Questions of political, economic and cultural order return.

So let us attempt to chart a course through uncertain waters with Odyssean inspiration.

First, we consult the auguries over the rapidly changing world order.

19TH CENTURY REDUX

The world order now emerging echoes many earlier eras, from the pre-industrial Eurasian empires and the 19th century Great Game to the 1823 Monroe Doctrine and the Cold War. See Ruffer Reviews passim.

The US raid on Venezuela embodied the 2025 US National Security Strategy’s Trump Corollary to the Monroe Doctrine – echoing President Theodore Roosevelt’s 1904 Corollary, which gave the US a policing function in the Americas.

The raid also sent a clear message to China, Russia et al. Stay out of America’s backyard. And another to foes – and friends – sitting atop valuable resources. You’re on notice.

Greenland and Cuba are next on the Great Game menu. With the 2026 mid-term odds against him, Trump is highly incentivised to make any bold moves sooner rather than later. The stakes are high, including the integrity of NATO.

The Don is making offers he thinks others can’t refuse. And yet, spectacularly successful though the Caracas raid was, renewed hemispherical emphasis is tacit admission of diminished status. As TV gangster Tony Soprano observed, if you gotta keep telling people you’re the boss, you ain’t the boss. China, the aspirant capo di tutti capi, can’t believe its luck as America turns on its allies.

“The contours of the new order will be set where interested powers are prepared to draw a convincing nuclear border.”

HARD NEW WORLD

Many of these changes will stick, whoever’s in the White House.

As Australian strategist Hugh White observes, 19th century America kept largely to the Western Hemisphere, insulated by oceans and weaker neighbours.1 The balance between European powers and British mastery of the high seas prevented the emergence of any major threat.

But thrice in the 20th century America intervened to prevent the emergence of a power which could dominate Eurasia and ultimately threaten the US: Germany in the two World Wars; and the Soviet Union during the Cold War.

In the post-Cold War unipolar era, America had no peer rivals and could exercise power as it wished without existential risk.

That has changed with rapid global levelling up, especially the rise of China balanced against a bevy of resurgent Eurasian powers and growing nuclear risk.2

HOLES IN THE UMBRELLA

For decades, American allies from NATO to Japan have sheltered under Washington’s nuclear umbrella. In theory, a nuclear attack on any brolly beneficiary could elicit an American nuclear response. Whether the US would risk trading New York for Bonn or Los Angeles for Tokyo was hotly debated, but Washington convinced the Soviets it might.

Now the Ukraine War and strained relations with treaty allies suggest America’s umbrella has holes in it. Big ones. Just as the final US-Russia strategic arms limitation treaty – New START – expires, partly because it does not include China’s ballooning arsenal.

Wise allies will hedge their bets. Technically capable states will consider their own strategic deterrence options.

And the contours of the new order will be set where interested powers are prepared to draw a convincing nuclear border.3

The net result for Russia and China is – paradoxically – likely bad news. Having chafed at US encirclement, they could end up in a worse strategic position, surrounded by nuclear-armed states, each with its own strategic doctrines and more incentive to use the weapons, since any attack by a far larger power could be existential. That creates the risk of crises as states approach threshold status.

Meanwhile, any country wishing to make a more predatory America think twice may also want nuclear weapons. You know where the US has not tried to capture a sitting rogue head of state? North Korea. And, if Denmark had nukes, would the US contemplate tilting at Nuuk? Despite the ‘deal’, we haven’t heard the last about Greenland.

European states were strategically infantilised by Pax Americana, skimping on hard power and doubling down on regulatory clout optimised for the US ‘rules-based’ order. They have now been caught with their trousers down. Unitary foreign and security policy is a distinct advantage in a more volatile world, putting states such as the US, China, Russia, India, Japan and even the UK at an advantage versus the EU’s patchwork.

Style aside, after the End of History hiatus, Trump hitting fast forward on the tape may in hindsight be seen to save Europe from its malaise, triggering a long-overdue focus on self-help, reform and rebuilding hard power. If not now, then never.

STRATEGIC AMBIGUITY

But nowhere is the reliability of US security guarantees more important than Taiwan, centre of global hi-tech supply chains. As 2026 dawned, Chinese naval vessels surrounded Taiwan again in response to tensions with Japan and record US weapons sales.

Yet America’s long-standing policy of strategic ambiguity – not confirming exactly what its response to a Chinese attack on Taiwan would be – has acquired new meaning: a general ambiguity towards US alliances, inviting probing.

The balance of power across the Taiwan Strait has shifted dramatically in recent years as Chinese forces have expanded rapidly. China famously plays the long game,4 but the upheaval in world order, Washington’s shaky commitment to allies, Trump’s commercial focus and Beijing’s moment of maximum supply chain leverage have opened a multi-year window. The perma-purged People’s Liberation Army (PLA) leadership does not currently appear well placed to exploit it. Yet Homer reminds us that war doesn’t start or continue for purely rational reasons. Honour, glory, divine providence – all play a part. And that’s why no one should rely on rational calculus alone for questions of epic history. Imagination will pay bigger dividends.

Plan Bs must now be accelerated across the outlying provinces of America’s decaying empire and its putative successor in the Western Hemisphere, and well beyond nukes. Are cloud capabilities for European governments built on Amazon Web Services really sovereign? Of course not. Is the UK nuclear deterrent sovereign if we need to lease missiles from Lockheed Martin? No. Governments are going to need bigger chequebooks to deal with over-reliance not just on authoritarian adversaries, but also on America.

“No one should rely on rational calculus alone for questions of epic history. Imagination will pay bigger dividends.”

“In an era of brute force, lateral thinking and obliquity will be more important than ever. Metis matters.”

BLACK BOXES AND SUCCESSION CRISES

What makes the global situation particularly unstable – but potentially more encouraging on a multi-year view – is a series of brewing succession crises which will inject further volatility into a system already in flux.

All is not well at Beijing’s top table. The most extensive purges since Mao are roiling the Chinese Communist Party (CCP) and its armed wing, the PLA.5 Parsing Chinese political entrails is notoriously hard. But a reasonable guess is that the purges relate to Xi’s efforts to secure another term from 2027 or Taiwan.6 Likely both.

Even with another term, Xi doesn’t have unlimited time on the clock. And there’s no clear succession plan.

Meanwhile, the end of the Ukraine War – plausible in 2026, for the first time – is likely to herald the beginning of the end of the Putin era. No doubt, that’s one reason he’s dragging his heels on peace: demobilised troops aren’t famously conducive to stability. Neither is switching off a war economy.

Further south, Iran remains the Axis’ weakest player. The ayatollahs are wobbling again, and Trump stands ready – and likely – to give them a push.7

Thus the world order could again look very different in just a few years – and authoritarian challengers are themselves fundamentally fragile.8 If domestic instability drives these ancient empires to turn inwards once again, America may yet have a second century of supremacy. In the meantime, these opaque regimes will remain black boxes, capable of springing surprises on global markets.

Meanwhile, consider how significant a premature end to the Trump II presidency would be, leaving the isolationist JD Vance on the throne.9 Beijing might well accelerate Taiwan plans.

ACHILLES HEELS

One of the dangers Odysseus faces on his journey home is the Cyclops Polyphemus. A mighty, cave-dwelling one-eyed shepherd, Polyphemus imprisons Odysseus and his crew. Brute force is no use against such a giant. But metis saves the day. Having persuaded the Cyclops his name was Nobody, Odysseus plies Polyphemus with hooch. The Cyclops passes out and is promptly blinded by Odysseus and his men, who then escape with Polyphemus’ flock. When Polyphemus cries that Nobody is attacking him, the other Cyclops ignore him. Understandably.

Middle powers – including investors – should take heed. In an era of brute force, lateral thinking and obliquity will be more important than ever. Metis matters.

So, too, the need to avoid drinking the proverbial Kool-Aid which can blind us to reality. Remaining independently minded and keeping our wits about us will be critical to navigating this new era.

Better yet there are returns to be had when others drink the Kool-Aid.

The West’s critical supply chain vulnerabilities and, ex US, military weakness stem from luxury beliefs and magical thinking over multiple decades. That is, acting as though the world is as you think it should be, not as it is. Chief amongst these was naivety about the continuing relevance of hard power and the importance of an industrial base to sustain it, coupled to the idea that Western values are the global default. Thus a faulty world model is revealed as the most dangerous Achilles heel and a reminder that, as the world remembers hard power, ideas matter, too.

Take rare earths. China had cultivated this supply chain weapon since the 1980s for just this moment – a textbook example of ‘unrestricted warfare’, which dissolves the boundary between war and peace and emphasises the use of any lever to achieve your objectives.10 That Beijing deployed it kept equity investors in the black for 2025 by forcing Trump to dial down the trade war.

But rare earths are just the tip of the spear. Beijing has similar chokeholds over many other critical minerals and strategically vital industries, including pharmaceuticals and batteries.

If you don’t control your supply chains, someone else does. And that means they control you.

Unlike mighty Achilles’ vulnerability, which stemmed from the point his mother held him as she lowered him into the River Styx, most of these strategic heels are fixable.

Revolution in world order demands restoration of hard power.

PART II POWER LAWS: FINANCE VERSUS PHYSICS

Much time and gold will now be expended on rebuilding it.

The challenge today, as Australian investor Craig Tindale observes, is that “the global economy is experiencing a structural breakdown in the conversion of financial claims into physical output… The financial system…is increasingly disconnected from physical reality constrained by geology, industrial reality and permitting timescales.”11

In plain English, matter matters. You might look rich on paper. But, if you cannot convert those claims into the assets you need – medication, bullets, chemicals – the numbers on the spreadsheet are ciphers. The Federal Reserve (Fed) can print dollars, but it can’t print copper mines or electric grid connections.

Capital freedom saw industrial production offshored from the West over decades in pursuit of higher margins. The mirror logic is that capital freedoms which allowed hard power to atrophy will now be restricted as it is rebuilt. It will take time.

Constrained supply can take years to respond at the best of times. In the West, as China and Silicon Valley watcher Dan Wang observes, this can be particularly acute, given the dominance of lawyers and process over outcomes.12

POWER

The ability to harness and transform dense energy is the signal characteristic of industrial civilisation.

All economic activity is energy transformed, so access to cheap, scalable and reliable power has always conferred strategic advantage. Odysseus’ crew had to rely on wind, tides and manpower to make progress on their journey.

King Aeolus conjured up a helpful West wind to send them on their way but gave them nasty gales contained in a bag, to boot. When the crew, suspecting they were being cheated out of riches, decided to open the bag, they unleashed meteorological havoc, which sent the ship far off course. Again.

But that all changed when James Watt’s steam engine launched commercially in 1776, the year America revolted. A quarter millennium later, America is doubling down on fossil fuels, with Western Hemisphere output still growing.13 America may have plentiful energy, but electricity capacity is now an American – and European – Achilles heel. In 2000, China produced around one third of US electricity output. Today. it produces around 40% more electricity than the US and the EU combined.14

The availability of cheap reliable electricity is a limiting factor in the roll-out of AI, one of the great battlegrounds in this global systems competition.15

Rapid AI advances will focus market minds on adoption winners and losers in 2026, alongside the growing risks from AI programs and agents which are already capable of blackmail and manipulation.16 What could possibly go wrong as the revolution eats its own parents?17

GIFTS FROM OLYMPUS

Electricity is underwriting the future well beyond AI. In the Iliad, Hephaestus – god of fire, blacksmiths and metallurgy – builds automata, proto-robots. These 20 self-driving tripods and golden handmaidens possessing artificial minds and speech embody extra-biological intelligence.

Once the preserve of the divine, EVs and humanoid robots are increasingly an everyday reality.18 For the first time in three centuries, it is not a Western power leading in many areas of innovation: 2025 was the year rapidly advancing Chinese tech intruded on general Western consciousness.

“The speed and scale of Chinese tech advances is still not understood in the West, making the Middle Kingdom an excellent place to find the lesser-spotted future, from drones and robotics to old age care.”

“Matter matters. You might look rich on paper. But, if you cannot convert those claims into the assets you need – medication, bullets, chemicals – the numbers on the spreadsheet are ciphers.”

The speed and scale of Chinese tech advances is still not understood in the West, making the Middle Kingdom an excellent place to find the lesser-spotted future, from drones and robotics to old age care.

China is dominant in the hardware elements of the electro-tech stack that is eating the world – batteries, electric motors, permanent magnets. Now, it is highly competitive in the AI which sits atop it.

Many suggest a need to overcome the limitations of large language models which have no fundamental foundation in reality. Just sophisticated correlations. Improved world models and a predictive understanding of outcomes may be key to the next breakthroughs, likewise memory and recursive learning.19

But others argue that scale rules. Moravec’s Raw Power thesis holds that AI rests on the scale of available compute and the data it consumes.20 Roughly, more compute means more powerful AI. If this holds true, throwing more compute at the challenge will deliver the win. And that requires a lot of electricity. Advantage, China – but only as long as it has enough advanced semiconductors to convert that energy into compute. This chip supply remains in America’s gift, for now.

Today, a generation after China hollowed out much Western industrial capacity, Chinese software and AI advances threaten the profit pools of established Western tech giants.21 Western firms must hope that Beijing’s ‘anti-involution’ measures – designed to ease over-capacity – are more than slogans.

But Beijing cannot sleep easily about energy, either. It has made electrifying progress in the industries of the future, but self-interest rather than environmental idealism has driven China’s renewables charge: it remains reliant on overseas energy. And the wider Chinese economy is struggling. The property and population busts continue. There were fewer births in China in 2025 than there were in 1738 – when China had a population just around a tenth of the current size.22 The fallout from demographic collapse across all major economies is only just beginning. Go long automation, which will increasingly disconnect economic output from traditional demographic drivers.

Now, the American empire has gained further leverage over Chinese energy imports, since most Venezuelan exports went to China.

The leverage will increase if Iran’s government can be made more amenable. Energy embargoes are an increasingly central part of Washington’s toolkit. Cuba faces one, to force regime change.

Beijing will note this game has been played before. It was a US energy embargo which pushed Japan to move in 1941 before its own strategic window closed. When the global market stops working, physical control of resources isn’t nine tenths of the law, it’s all that matters.

So, from copper to oil via protein and gold, inventory levels must now increase to boost resilience, supporting commodity demand. And military power must secure supply routes.

RIGHT ON Q

Global trade allows the conversion of financial claims into commodities and goods. Well beyond energy, this is increasingly contested.

Pace Helen, one motivating factor for the Trojan War may have been control of the strategic trade routes through the Dardanelles.

The Trojan War was not ended by main force but by subterfuge. A Greek wooden horse left in apparent token of respect. Instead filled with troops which could bring Troy down from the inside.

The quest for asymmetry is as old as warfare itself, and our globalised system offers plenty of opportunities. Twenty-first century Trojan horses are already under construction.

Q-ships were originally conceived by the Royal Navy in World War I. Disguised as civilian vessels, they lured U-boats into surfacing to fire their guns. Then the Q-ships attacked.

Disguised military capability – the Odyssean signature – becomes increasingly important in a world where orbital eyes never sleep.

In late 2025, a Chinese container ship converted to carry large quantities of precision guided missiles was noticed, partly because it has a visible array of self defence systems.23 But, with many weapons systems now containerised, how confident can you be that the freighter steaming into your port isn’t a Trojan horse?

Appropriately, 2026 is the year of the fire horse in the Chinese Zodiac.

Containers are the unsung heroes of globalisation. Now the entire global container fleet becomes suspect, likewise China’s vast ‘fishing fleet’ (aka maritime militia), which can be arrayed as a floating wall, hundreds of miles long.24

Containerised surprise could confer dramatic advantage. Just look at Ukraine’s Operation Spider’s Web against strategic bombers parked deep within Russia.

ASYMMETRY

Growing Great Power assertiveness and the vulnerability of the global trading system both demand greater resilience.

So, too, does the democratisation of precision strike, handing asymmetric disruption ability to hostile states and non-state actors alike.

Cheap drones, increasingly controlled by autonomous AI, now destroy military matériel worth tens of millions a pop. A single drone (sighting) can shut down entire airport hubs for extended periods. And how exactly will countries defend their shiny new data centres and grids against drone attack?

Inexpensive undersea drones – perhaps pre-emptively stashed as loitering munitions – could render critical global maritime chokepoints impassable. Or at least uninsurable – which is the same thing for modern commerce. That’s one reason Cuba is such valuable real estate for enemies of the US. And why it’s on the menu.

This asymmetry renders many conventional warfighting capabilities unaffordable for any sustained Great Power conflict.

The UK, for example, has virtually no missile defences to speak of. Worried about a saturation drone attack or ballistic missile barrage? The cost of an entry-level Iron Dome-style missile defence shield could easily be £30 billion. The total UK defence budget for this year is about £62 billion.

This asymmetry makes rapid development of direct energy weapons with – in principle – inexhaustible ammunition (energy) inevitable. Go long.

“Markets now exist in a state between war and peace, with policy settings to match. Time to dust off the mid-20th century economic textbooks.”

GENESIS – MANHATTAN 2.0

As one order breaks down, the impulse to rebuild hard power faces constraints – not least because the preferred industrial base to convert financial claims to real stuff is in the great antipole of world order: China. Meanwhile, the trading system itself – from vulnerable waterways to container ships – is increasingly fraught, whilst drones and cyberattack hold all infrastructure at risk.

Deeper trade with China was expected to Westernise it. Instead, the West is sinicising, from totalising CCP-inspired covid responses to expanded censorship and Chinese tech.

Now, as America gears up for long-term competition, it is borrowing increasingly from the Chinese playbook: state capitalism is already playing a larger role in the West. The Pentagon has backed a variety of critical mineral operations. More will follow, whilst Trump’s near daily policy interventions are increasingly Xi-like: homes are for living in, not for speculation translates to private equity can’t buy single family homes, and so on.

Markets now exist in a state between war and peace, with policy settings to match. Time to dust off the mid-20th century economic textbooks.

Tech remains the key battleground. In late 2025, the White House announced the Genesis project, which aims to use AI to accelerate scientific progress in critical areas, from space to nuclear and biotechnology. It’s a second Manhattan Project.

AI here is revealed as an invention to assist with inventions, promising to compress timelines, dragging the future into the present.25

Technological financial innovations – such as stablecoins, which create demand for US debt – are being exploited to manage fiscal risk. The GENIUS Act, which sets out the rules for crypto and stablecoins, specifically forbids paying interest on stablecoins. In principle, this makes them perfect vehicles for financial repression. They’re likely to need it since Chinese innovations in alternative global payment systems will ultimately force more people to use digital yuan to access China’s industrial base, reducing trade demand for US dollars.

More activist governments need more money for pet projects. But, with debt-to- GDP ratios so high across the West, debt service costs are now consuming a much larger portion of government budgets.

“In Europe, 1848 was the year of revolutions as the old order political systems succumbed to economic and cultural changes. We are swimming in similar waters.”

Control over rates has thus become far more consequential for sovereigns which need faster growth and contained yields to erode the real value of debt whilst funding re-armament etc.

Central bank independence is therefore a constraint not on inflation so much as on government policy latitude. It is incompatible with a hard power world.

It is revealing that former Wall Street titan and now US Treasury Secretary Scott Bessent does not want to be Fed Chair. He knows Treasury Secretaries hold the whip hand from here.

The challenge for all heavily indebted governments in this era is to meet the challenges of system change without tipping into fiscal disaster – to rebuild hard power to meet the Scylla of a more volatile and dangerous world order and yet avoid the Charybdis of a debt doom loop with an inflationary outcome.

The politicisation of capital to address these hard power realities has only just begun. Financial repression marches ever closer.

PART III LOTUS EATERS

America has called time on its own order and is not sitting still as the successor emerges.

But not everyone has got the memo.

Odysseus met the Lotus Eaters as he voyaged home. The lotus plant induced forgetfulness and placidity.

In our time, Lotus Eaters occupy many high offices. Regrettably, large chunks of the Western electorate are similarly distracted by Huxleyan tech-soma.26

The world view of most Western leaders was formed by the 1990s. Peak Pax. Peak End of History. Peak lotus chomping.

The worst possible mental training ground for the world emerging around them.

ITHACA

And this brings us to one of the most underestimated risks: internal disorder.

Odysseus returned home to find Ithaca in a state of disorder. The home front needed restoration.

Much investor attention is lavished on the breakdown of the post-World War II global architecture, less on the breakdown within countries, both East and West.

Take Europe. Welfare states were founded in relatively homogeneous populations, with shared experience of total war. That sense is now a pale shadow of its former self. But the financial obligations which sprang from it loom ever larger as ageing populations expand.

Increasingly incoherent bodies politic with post-modern, post-meaning public squares must now face Big Questions again, just as AI-related labour market upheaval gathers pace.

Demigods haunted Homer’s world with their capricious designs for humanity. They may find a parallel in increasingly incomprehensible AI which is also turbocharging inequality: returns to capital could be less limited by the traditional labour bottleneck.

Already, real wages in the UK have been flat since the global financial crisis – the longest stagnation since the Napoleonic Wars.27 The highest industrial electricity prices in Europe – more than four times US prices – are killing British industry. Half that bill is tax and carbon levies.28 Rebuilding hard power without affordable, well, power is impossible. High energy costs aren’t just wrecking legacy industries; they risk leaving Europe even further behind the US and China in energy-intensive AI.

SIREN CALLS

On his voyage, Odysseus must pass the Sirens.

The sorceress Circe advises Odysseus to strap himself to the mast so that he can hear their bewitching song but not be lured to his destruction. His crew are ear-waxed to the max.

The seductive Sirens claim to be all-seeing, “know[ing] whatever happens on this fruitful earth.”

What Siren calls must be resisted in this time of great change? Narrow certainties and the belief that just a bit more technocratic control is the answer. In the pre-credit crunch era, naïve over-reliance on markets and globalisation saw hard power dissipate for many Western states which believed history had ended.

In the post-credit crunch, post-covid era of increasingly socialised risk, government has rapidly expanded. But not to rebuild hard power or transform productivity. Instead, low interest rates and continued faith in a ‘rules-based’ system saw unaffordable expansions in regulation, welfare and low-wage migration. The result? Soggy growth, falling living standards and fraying public services, despite record taxes.

But somehow there’s still cash for £100 million bat tunnels.29 And for £700 million fish discos. These sound systems to repel fish from nuclear power station cooling inlets are estimated to save – drumroll please – one salmon per year.30

Rusting 20th century leviathans forged in total war stagger forward, struggling to manage increasingly antipathetic taxpayers fed up with declining living standards, mass immigration, luxury beliefs and identitarian politics.

The way out? Absent a productivity miracle, which AI may yet deliver, generational reform of welfare states must pay for reality’s revenge.

En route, political volatility is going to increase. And that will drive inflation volatility higher (see Henry Maxey’s piece).

In Europe, 1848 was the year of revolutions as the old order political systems succumbed to economic and cultural changes. We are swimming in similar waters.

“Great Games require Great Hedges. All economic activity is energy transformed. Which makes energy a valuable portfolio offset.”

Baby Boomers broke the inter-generational bridge, politically, economically, culturally. Now, faced with a darkening geopolitical age and massive economic upheaval, Boomer politicians are reaching for the language of sacrifice, after their own historically easy ride.

Having spent the thick end of 60 years actively undermining the ties which bind coherent societies together, they are in for a shock. Ithaca is much changed.

What is significantly underpriced is the risk of serious internal disorder within major economies, especially Western European ones: the rising political radicalism of Gen Z pitted against the Boomers’ assetocracy, a settlement designed to inflate and sustain high asset prices.

PART IV THE ODYSSEY

This is the Age of Empires, Age of Discovery, Industrial Revolution, Scientific Revolution and Cultural Revolution rolled into one. So where to park capital?

In brief: long real assets; short magical thinking and luxury beliefs.

Previous Reviews have suggested themes ranging from defence and cybersecurity, semiconductor niches, automation and robotics (to address demographic collapse), applied AI, precious metals, other commodities to energy grids and other capex bottlenecks and infrastructure to rebuild resilience. All still stand.

Great Games require Great Hedges. All economic activity is energy transformed. Which makes energy a valuable portfolio offset. Likewise derivatives which profit from higher volatility, whether a result of (geo)politics, fiscal crisis or even AI demigods running amok.31 Just as for Odysseus, the shocks will keep coming. And they won’t all be foreseeable.

Currency markets will be important in resolving the question of financial power versus hard power. The age of highly synchronised monetary policy cycles is likely ending. A more fragmented system will bring more discontinuous FX moves, as we saw in the Bretton Woods era. And beware capital conflict and controls as the global system fragments. We are currently in the phoney war stage for capital.

Rebuilding the rest of the world’s resilience is likely to come at the expense of current overweights to US assets. But it is also plausible that the new American Empire – a more integrated Western Hemisphere,rich in critical resources and more favourable demography – could remain the favoured long-term destination for capital.32

When it’s allowed to move.

ODYSSEAN WISDOM

But more important than any single asset or idea is an approach.

The late Nobel-prize-winning physicist Murray Gell-Mann popularised the idea of an Odyssean or integrative mindset. This hybrid of the logical Apollonian method and the intuitive and synthetic Dionysian alternative allows practitioners to synthesise ideas from across multiple domains to better deal with complex adaptive systems.33

How does Odysseus help the Greeks to victory in the Trojan War and then survive his decade-long journey? Metis.

In a complex world, he remains focused on his objectives and exercises judgement based on reality, not how he would wish it to be. He operates under constant uncertainty, managing existential risks. He remains flexible, using obliquity where necessary. He structures his team to help them collectively resist Siren calls to perfect knowledge along the way. He overcomes brute force and magic with imagination.

It is a reminder, before people swing too hard for hard power, that ideas have power, too – sometimes revolutionary. The Whig interpretation of history – that history inevitably bends towards progress – embodied in End of History thinking and innumerable historical contingencies helped create the current global order. In time, new orthodoxies with their own blind spots will create the next.

As the journey unfolds and the Big Questions appear once again, the omens are clear: the Lotus Eaters will not survive the journey. But the Odysseans will thrive. The voyage will be epic. ⬤

THE RUFFER REVIEW IN CONVERSATION

Watch Alexander Chartres episode of Ruffer Radio where he and Investment Specialist Gemma Cairns-Smith discuss the acceleration of the ‘New World Disorder’, the rise of hard‑power politics, and why an adaptive, reality‑based mindset is essential.

12 mins

1 White (2025), Hard New World. Hat tip Felix Martin 2 Ibid 3 Ibid 4 Doshi (2021), The Long Game 5 The PLA’s most senior general, Zhang Youxia, was purged shortly before this went to print 6 After the purge of General Zhang, Taiwan policy is more personally controlled by Xi 7 The Caracas operation suggests Trump may favour a change of leadership, not necessarily full regime change 8 Stephen Kotkin foreignaffairs.com 9 As all the bombing suggests, Trump never has been an isolationist! 10 Qiao and Wang (1999), Unrestricted Warfare 11 Tindale (2026), The Hard Bifurcation 12 Wang (2025), Breakneck. See also The Unaccountability Machine 13 Thompson (2025), Ruffer Review 14 Ember, Energy Institute, ourworldindata.org 15 I will roll my bet on ‘agentic’ as word of the year to 2026! 16 ‘Agentic misalignment’ will become one of the great euphemisms of our time! anthropic.com 17 Anthrophic AI’s ‘red team’ reports are recommended reading, red.anthropic.com 18 The Taoist text Liezi tells of Yan Shi, creator of the first humanoid robot in China. Remarkable early sci-fi. Likely originally first millennium BC. 19 Yann Le Cun (2026), MIT Technology Review 20 Moravec (1976), Raw Power in Intelligence, hat tip Samuel Albanie 21 James Kynge chathamhouse.org 22 Yi Fuxian project-syndicate.org 23 The War Zone twz.com 24 New York Times 26 The opiate of the masses in Brave New World 27 tuc.org.uk 28 instituteforenergyresearch.org 29 BBC 30 thetimes.com 31 Surely AI cyber attack is one of the most under-priced risks out there 32 David Lubin chathamhouse.org 33 Gell-Man (1994), The Quark and the Jaguar