How not to win the technology race with China

Donald Trump’s all-guns-blazing approach is a sure way to a lose-lose break with Beijing

Philip Stephens

web_Technology race

Never mind tariffs and quotas. The animating ingredient of the great power contest between the US and China is the global race for digital primacy. Given the stakes — economic and military — a period of pretty ferocious rivalry is inevitable. The danger is that unavoidable competition will spill over into unnecessary conflict.

Some western governments are still debating whether to allow the Chinese communications company Huawei to supply equipment for the new 5G networks that will underpin critical national infrastructure. The US has said No. So too has Australia. One way for others to think about the issue is to ask whether Beijing would allow their companies to embed such technology in China’s national systems.

Any doubts about the answer will have been dispelled this week by the news that the Chinese government has decreed that state entities and public institutions must remove within three years all foreign computer equipment and software. We are talking here of Beijing ripping out old foreign tech. The idea that it would allow outsiders to play a role in building next generation communications is beyond imagination.

You do not have to believe that Huawei is under the control of the Chinese Communist party to say it would be foolhardy of Germany, France or Britain to allow it a role in 5G. The risks and stakes are too high. These superfast networks will provide the data speeds needed for the next great leap forward — for the internet of things, for greatly-enhanced machine learning and artificial intelligence. The applications, it is already obvious, will be as important in space and advanced military systems as in transforming urban environments and the way people live.

In the circumstances, it goes without saying that China will use whatever instruments it has in an effort to steal a march and, in time, to become the dominant provider and standards-setter in the new technologies. We know this not simply because Beijing has passed an intelligence law that stipulates Chinese companies owe an ultimate loyalty to the state but because, given the chance, western intelligence agencies would not shrink from taking any opportunity that presented itself to get inside China’s networks.

Donald Trump, of course, does not make it easy for America’s allies. The US president’s all-guns-blazing approach is a sure route to a lose-lose rupture with Beijing, reaching well beyond the fact that both sides will always do their best to spy on each other. Mr Trump’s browbeating of allies is counterproductive. Threatening retaliation if they do not follow the US line is a sure invitation to defiance on the part of Europeans.

Cocking a snook at Mr Trump, however, is not a reason for Europeans to ignore their own interests. At the moment they trail in third place. There are those, in Britain especially, who say the risks of Huawei’s involvement can be mitigated by intrusive monitoring. The UK’s secret communications agency GCHQ already has close oversight of the Chinese company’s work in existing telecoms networks. With 5G, though, oversight demands ever-rising resources, and the consequences of getting it wrong are immeasurably higher.

In any event, Europe should be worried about being left behind. It lags both the US and China in technologies such as machine-learning and artificial intelligence. In Nokia and Ericsson, however, it has the only two global players able to compete with Huawei. It would be more than strange to give up this modest advantage by buying Chinese.

Robert Zoellick, the former senior US official and World Bank president, once remarked that the goal of US policy towards China should be to persuade it to become a “responsible stakeholder” in the rules-based international system. Lately, the fashion has been to deride this ambition as naive. Hasn’t Beijing shown over and over again that it is ready to ignore, bend and break the rules in pursuit of its own national advantage?

In part, yes. China’s attempts to game the system are undeniable. It does not follow, however, that the US should become a willing accomplice in the destruction of a set of rules largely designed and made in Washington. As Mr Zoellick remarked in a speech this month to the US-China Business Council, it scarcely serves the west’s interests if the policy of confrontation prods China “into championing a parallel, separate system, with very different rules”.

Rivals need not become outright adversaries. Competition should be a spur to improve one’s own performance rather than an effort to trip over competitors. Put another way, if America wants to win the technology race, it should raise its own game. The alternative approach, seemingly favoured by Mr Trump, focuses on bringing down rivals. That will only spark a broader Sino-American confrontation.

The message to Chinese president Xi Jinping should of course be clear-eyed. Beijing cannot throw up its own barricades and complain when it loses access to advanced western technologies. And there are still great swaths of global policymaking where both will gain from co-operation.

As Mr Zoellick puts it, the way to compete with China is by producing better ideas and smarter technologies, not by bullying and retreating.

The Global Economy’s Luck May Run Out

Compared to this time last year, the prospects for markets and the global economy heading into 2020 are surprisingly bright. But look further ahead and you will encounter deep uncertainty, suggesting that policymakers around the world would do well to implement inclusive-growth policies sooner rather than later.

Mohamed A. El-Erian

elerian119_dowell Getty Images_stockmarketscreennumbers

ABU DHABI – This being December, my natural inclination is to review the past year’s economic and financial developments to help policymakers and investors anticipate what might be coming in 2020. This year is ending on a relatively positive note, especially when compared to the same time last year.

There is hope of a global growth pickup, trade tensions have lessened, and central banks have reaffirmed that that they will maintain ultra-low interest rates and continue to provide ample liquidity. Financial volatility is subdued, and there are reasonable expectations of solid investor returns across many asset clases.

As tempting as it is to dwell on current financial and macroeconomic conditions, doing so risks obfuscating a key element in the outlook for the future. There is a curious contrast between the relative clarity of expectations for the near term and the murkiness and uncertainty that comes when one extends the horizon further – say, to the next five years.

Many countries are facing structural uncertainties that could have far-reaching, systemic implications for markets and the global economy. For example, over the next five years, the European Union will seek to establish a new working relationship with the United Kingdom, while also dealing with the harmful social and political effects of slow, insufficiently inclusive growth. The EU will have to navigate the perils of a prolonged period of negative interest rates, while also shoring up its economic and financial core.

As long as the eurozone’s architecture is incomplete, consistent risks of instability will remain.

Moreover, in the years ahead, the United States, having notably outperformed many other economies, will decide whether to continue disengaging from the rest of the world – a process that is at odds with its historic position at the center of the global economy.

Or consider China’s development process. With the global economy acting more as a drag on growth than a boon to it, China may confront the risk that it has overplayed its hand. Heavy reliance on short-term stimulus measures is increasingly inconsistent with pursuing the longer-term reforms that it needs, and its geopolitical ambitions and regional economic and financial commitments (including the Belt and Road Initiative) are becoming costlier.

Most important, in the next five years, China and the US, the world’s two largest national economies, will have to navigate an increasingly narrow path as they try to secure their own interests while avoiding an outright confrontation.

Such fluidity clouds the economic, financial, institutional, political, and/or social outlook for other countries. Today’s macroeconomic and geopolitical uncertainties will amplify those fueled by technological disruptions, climate change, and demographics. And they will raise questions about the functioning and resilience of the global economy and markets.

This degree of uncertainty is particularly notable in the multi-decade context of globalization.

In recent years, the stability that comes with broad-based adherence to the rules-based international order has been considerably weakened, as has the power of central banks to repress financial volatility and buy time for the real economy.

Left unmanaged, these medium-term structural trends would set the stage for greater political and social fragmentation, and raise the specter of secular de-globalization.

If there is one thing that neither the global economy nor markets are wired for, it is a prolonged and deepening rupture in cross-border economic and financial relations. Were such a new paradigm to materialize, today’s trade, investment, and currency tensions would intensify and spill over to the realm of national security and geopolitics.

Bad outcomes are not inevitable (at least not yet). They could still be averted through the sustained implementation of policies to promote stronger, more inclusive growth; restore genuine financial stability; and usher in a fairer, more credible (while still free) system of international trade, investment, and policy coordination.

But much will depend on the functioning of politics in the near term. Going into 2020, politicians have a favorable runway from which to launch the policies needed to extend the positive short-term outlook into the medium and long term. Worries about global recession have receded, financial conditions are ultra-accommodating, and US-China trade tensions have de-escalated. But these auspicious circumstances will not last forever.

Unfortunately, a policy push that could improve and clarify the medium-term outlook is unlikely. The US is entering a tense and divisive election year. Germany, Italy, and Spain are in the midst of difficult political transitions. The EU is dealing with Brexit and other regional divisions.

And China’s government is trying to consolidate power in the face of slowing growth and continuing protests in Hong Kong. The main worry – one that too few market participants have spotted – is that over the next five years, global economic and market conditions may need to deteriorate nearer to crisis levels before national, regional, and multilateral political systems muster an adequate response.

Fortunately, we are now in a period when action could be taken to prevent the worst-case scenario from becoming a binding reality. Let us hope that I’m wrong about today’s political paralysis.

As long as there is still time, there is a chance that policymakers will follow the advice offered by then-IMF Managing Director Christine Lagarde in October 2017: “Fix the roof while the sun is shining.”

Mohamed A. El-Erian, Chief Economic Adviser at Allianz, the corporate parent of PIMCO where he served as CEO and co-Chief Investment Officer, was Chairman of US President Barack Obama’s Global Development Council. He is President Elect of Queens’ College (Cambridge University), senior adviser at Gramercy, and Part-time Practice Professor at the Wharton School at the University of Pennsylvania. He previously served as CEO of the Harvard Management Company and Deputy Director at the International Monetary Fund. He was named one of Foreign Policy’s Top 100 Global Thinkers four years running. He is the author, most recently, of The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse.

The Trade War Is Over, Long Live The Trade War

by: Lance Roberts


On Friday, "Phase One" of the "Trade Deal" was agreed to, with the Trump Administration originally stating that "Phase Two" would not begin until after the 2020 election.

From an investment view, the agreement is clearly about two things: Boosting exports of agricultural products, and devaluing the dollar.

With forward returns likely to be lower and more volatile than what was witnessed over the last decade, the need for a more conservative approach is rising.
Market & Portfolio Positioning Review
"The 'Trade War' Is Dead…Long Live The 'Trade War.'"
On Friday, "Phase One" of the "Trade Deal" was agreed to, with the Trump Administration originally stating that "Phase Two" would not begin until after the 2020 election.
Then reality set in.
Since 2018, President Trump has come to understand that if the market declines, a "tweet" about a "trade deal coming" would spark a market rally.
Without a "trade deal" to negotiate, there is no catalyst to support asset prices heading into the election.
This is why on Friday, Trump immediately declared that "Phase Two" of the trade deal would begin immediately.
Long live the "trade war."
In our "Macro View" piece, we go into much more detail about the "trade deal" and what to expect next. However, from an investment view, the agreement is clearly about two things:
  1. Boosting exports of Agricultural Products.
  2. Devaluing the Dollar.
With the Fed giving up on its mandate to maintain price stability (it recently stated it will let inflation "run hot"), the path was cleared for the Trump Administration to devalue the U.S. dollar (which is inflationary) without worries the Fed will start hiking rates.
This is one of the reasons we have started laying commodity exposure into our portfolios with the recent positions in precious metals and energy. We recently published a thesis "Collecting Tolls On The Energy Express" for our RIAPRO subscribers.
"This model forecasts the price of MLPI based on changes to the price of XLE and the yield of U.S. Ten-year Treasury Notes. The model below has an R-squared of .76, meaning 76% of the price change of MLPI is attributable to the price changes of energy stocks and Treasury yields. Currently the model shows that MLPI is 20% undervalued (gray bars). The last two times MLPI was undervalued by over 20%, its price rose 49% (2016) and 15% (2018) in the following three months."

The Demise Of The Dollar

As shown in the chart below, the dollar has broken below both its rising trendline from its previous lows and the 200-dma.
(We cover the dollar and positioning each week for our RIAPRO subscribers because the dollar impacts exports which make up about 40% of corporate profits).
Currently, the breakdown is very early in it potential progress. As we saw in June, that breakdown was short-lived before it reversed as foreign dollars continue to poor into USD denominated assets for both safety and higher returns than elsewhere in the world.
We previously discussed this important point in "The Great Cash Hoard Of 2019."

"As it relates to foreign positioning, it is worth noting that EURODOLLAR positioning has been surging over the last 2-years. This surge corresponds with the surge in dollar-denominated money market assets. 
What are Euro-dollars? The term Eurodollar refers to U.S. dollar-denominated deposits at foreign banks, or at the overseas branches, of American banks. Net-long Eurodollar positioning is at an all-time record as foreign banks are cramming money into dollar-denominated assets to get away from negative interest rates abroad."
Importantly, when positioning in the Eurodollar becomes extremely NET-LONG, as it is currently, the reversal of that positioning has been associated with short to intermediate corrections in the markets, including outright bear markets.
What could cause such a reversal?
A pick-up of economic growth, a reversal of negative rates, a realization of overvaluation in domestic markets, which starts the decline in asset prices, or the devaluation of the US dollar.
A reversal of positioning would spark a virtual spiral, with assets flowing out, which lowers asset prices, leading to more asset outflows.
While the bulls are certainly hoping the "cash hoard" will flow into U.S. equities, the reality may be quite different.
Watch the dollar closely.
Santa To Visit Broad & Wall
As we head into the last two weeks of the year, and the decade, it is time for Santa to visit "Broad & Wall." While I expect the markets to try to rally into year end, there are a couple of caveats which could derail that optimism.
Currently, "bullish sentiment" and "optimism" are once again extremely lopsided. Currently, investor cash is at extremely low levels, with investors fully allocated to equity risk. This is a sharp reversal from this summer when "everyone" thought a "recession" was near.
Lastly, the markets are back to extremely extended and overbought conditions in the short-term, which suggests the majority of the current advance has been made and a correction is needed before a further advance can be made.
With the market currently overbought and more than 7% above the 200-dma, corrections usually come before the next advance ensues. Such suggests being a little prudent in adding exposure too aggressively and look for weakness to opportunistically position portfolios.
On a monthly basis, we see much the same deviation from long-term (three-year) moving averages. Historically, when extensions from the long-term moving average are this extreme, corrections have tended to occur. In most instances, that reversion entailed a correction back to the long-term mean.
Rules For A Santa Rally
Currently, our portfolio allocations remain primarily long-biased although we are carrying a slight overweight position in cash; we have also recently added positions to take advantage of a potentially weaker dollar and a steeper yield curve. We also recently took profits in our Healthcare sector which has gotten grossly extended.
These processes follow our basic rules of portfolio management which you can apply to your portfolio as well to reduce overall volatility risk.
  1. Tighten up stop-loss levels to current support levels for each position.
  2. Hedge portfolios against major market declines.
  3. Take profits in positions that have been big winners.
  4. Sell laggards and losers.
  5. Raise cash and rebalance portfolios to target weightings.
Notice, nothing in there says "sell everything and go to cash."
Remember, our job as investors is actually pretty simple - protect our investment capital from short-term destruction so we can play the long-term investment game.
Here are our thoughts on this.

  • Capital preservation
  • A rate of return sufficient to keep pace with the rate of inflation.
  • Expectations based on realistic objectives. (The market does not compound at 8%, 6% or 4%)
  • Higher rates of return require an exponential increase in the underlying risk profile. This tends to not work out well.
  • You can replace lost capital - but you can't replace lost time. Time is a precious commodity that you cannot afford to waste.
  • Portfolios are time-frame specific. If you have a 5-years to retirement but build a portfolio with a 20-year time horizon (taking on more risk) the results will likely be disastrous.
With forward returns likely to be lower and more volatile than what was witnessed over the last decade, the need for a more conservative approach is rising. Controlling risk, reducing emotional investment mistakes and limiting the destruction of investment capital will likely be the real formula for investment success in the coming decade.

The Russian Military: Moscow’s Greatest Ally and Worst Enemy

By: Jacek Bartosiak

It’s impossible for a state to maintain its status as a major power, even in its own region, without having a military to back it up. In the case of Russia, the transition from Soviet Union to Russian Federation all but gutted its armed forces; the military was simply too closely connected to the state system to withstand the shock of the reforms introduced by Mikhail Gorbachev.

After the Soviet economic system collapsed, the military essentially lost its financing, resulting in lost wages, corruption and an irreparable decline in morale.

It quickly became clear that, despite the chaos, economic collapse and social disorganization, the armed forces still had a job to do: It needed to relocate units and equipment inside Russia proper as well as the now-independent former republic, and it needed to do something with its nuclear arsenal. The latter problem was easy enough to resolve.

Russia, Ukraine, Belarus and Kazakhstan signed an agreement whereby all stockpiles would be returned to Russia. The former issue proved much more difficult. “Russian” servicemembers returned to Russia, while servicemembers from the republics stayed there, becoming the foundation of the new militaries of the new states. The result was the dislocation of soldiers who were unprepared for their new environments.

What’s more, Russian soldiers deployed in units based on geography – for example, the contingent of the 14th army of Moldova – remained in place and openly rebelled all the time. Some units even refused to stay. Others, such as those in Georgia and Tajikistan, were drawn into local ethnic conflicts. Still others had newer mandates.

Erstwhile internal military districts, like those in Moscow and the North Caucasus, now found themselves on the frontier of the Russian state, but without the combat experience and mobilization readiness that would normally characterize such districts.

The Russian army of the 1990s was thus weakened at a time when it faced utterly new challenges, including a lack of money, bad demography, a lackluster conscription pool, evasion of service, hazing and other forms of violence among its soldiers.

In the first decade after the collapse of the Soviet Union, funding dried up, and no serious reform reflecting the changed nature of the Russian state and hence its new challenges was made. The once-powerful arms industry barely made ends meet, mainly by selling its products abroad. Troops failed to receive new equipment. The programs of the future were tabled. When fuel and ammunition for routine exercises were delivered, deliveries were often late and short.

Even the salaries of officers, who were widely respected as societal elites, were paid late. Combat readiness practically evaporated, and officers and professional staff often had to work civilian jobs to supplement their income. Military equipment rusted in squares and warehouses, and pilots’ skills atrophied as they logged fewer and fewer hours of flight training.

The results spoke for themselves. Russia, once a powerful country, suffered early defeats at the beginning of the Chechen War (1994-96). Eventually, competently trained and better-equipped units were deployed to Chechnya, but they were still composed of random soldiers from disparate units throughout Russia. It bade poorly for combat readiness, harmonization and overall quality.

Historically in Russia, great military reform was born from a seminal event: a military disaster, a change in the nature of the Russian state or a transformation of the geopolitical environment in which the state operated. Under the czars, the reforms of Field Marshal Dmitry Milyutin were the result of the humiliations during the Crimean War (1853-56). Prime Minister Pyotr Stolypin’s reforms were the result of the Russo-Japanese War (1904-05). In the 1920s and 1930s, Mikhail Frunze and Mikhail Tukhachevsky tried to find a way to answer first the threat to the existence of the new communist state and later the military development of Germany which meant to change the world order.

During World War II, Semyon Timoshenko sought to cope with the mighty German war machine; the great reforms of the Red Army were carried out from 1941 to 1945. Gen. Georgy Zhukov executed his reforms in the 1950s as a response to the new security environment in  Europe, and in the 1960s with the advent of more sophisticated weaponry – rockets, tactical nuclear weapons and so on. Finally came the great reforms of Field Marshal Nikolai Ogarkov, who overhauled and modernized the army as part of his Revolution in Military Affairs in the 1970s and 1980s.

The post-Soviet debate over military reform, sustained by the failures of the Chechen War, persisted into the Yeltsin era. Policymakers generally agreed on the need for reform but invariably failed to implement it. That changed after Vladimir Putin came to power. With his staunch supporter, Sergei Ivanov, in charge of the Ministry of Defense, minor improvements were made, helped greatly by the rise of oil prices after 2002. Between 2001 and 2007, spending on military modernization doubled, reaching 573 billion rubles (more than $9 billion by today’s exchange rate). Throughout this time, Russian forces became smaller and more agile with improved combat readiness.

Welcome though Putin’s efforts may have been for the military, they were 20 years too late. The armed forces entered the 21st century still armed with Soviet-era equipment and operated in an archaic Soviet-era system unable to rise to the occasion of the new day. The Russo-Georgia War of 2008 demonstrated a terrible state of intelligence and reconnaissance capabilities and a low state of command and communication capabilities. Precision ammunition was particularly lacking, logistics were poor, the basic equipment used by the Russian army was old, and recruits remained poorly or insufficiently trained for modern warfare.

In response to the war, Anatoly Serdyukov, who served as defense minister from 2007 to 2012, introduced modernization measures such as the Armed Forces Development Program that prioritized increasing combat readiness, professionalizing the service and acquiring new weapons.

Military expenses jumped from $57 billion to $91 billion, which he used to address glaring problems: the fact that a unit’s and formation’s constituent parts did not know or train with one another, and that mass mobilization, especially on the country’s periphery, was much slower than it should be. In fact, this was always a problem for the czarist and Soviet militaries, which struggled to mobilize within such an infrastructurally constrained state as Russia. (It’s worth remembering that the Soviets had war plans for mass mobilization, the purpose of which was to be able to wage war with NATO in Europe and with China in the east.

The entire system, however, was focused more on efficiently mobilizing the masses than on their command. There was simply too much administration and too many incompatible equipment systems to put on a line. Russia had so much surplus equipment, in fact, that in 1991, 3.4 million people were serving in the Soviet army, of which as many as 1.2 million serviced army stores.)

Russian military history is replete with attempts at improvement, but it’s safe to say that the beginning of the most significant came with the appointment of Serdyukov. This is a symbolic beginning of the construction of a new Russian army and a real mental revolution in the country. Before his tenure, the command system was simply absurd. It just took a few military humiliations to get there.

Two Holidays

By: George Friedman

This week we are celebrating two holidays in our house: Hanukkah and Christmas. In the United States, Hanukkah has become an elongated Christmas focused on gift giving.

The true meaning of Hanukkah is lost, with most not understanding that they are celebrating victory in a brutal war between the Seleucids, heirs of the Alexandrian Empire, and a faction of the Jews who also engaged in a civil war against other Jews.

This happened almost two centuries before Christ (167-160 B.C.).

There was a war between Damascus and Jerusalem. The Seleucids wanted to control the Mediterranean, so they needed to take Egypt. In order to do that they had to take today’s Lebanon and Israel. They succeeded, but the further expansion of the empire fell victim to a Jewish rising.

The Seleucids had imposed laws on the conquest of Israel that required Jews to adopt Greek culture, and that included placing a statue of Zeus in the temple. Many Jews, preferring to be left alive, adopted these customs, some retaining hidden Jewish beliefs, others leaving it all behind.

But a faction led by a charismatic figure called Judah Maccabee (Hebrew for “hammer”) was revolted by this. Maccabee launched a war against the occupation and simultaneously against Jews who had capitulated to Greek sensuality. He waged a brilliant guerrilla war against the Seleucids, designed to cut lines of supply and communication between Damascus and Jerusalem.

He also carried out a civil war against Jews who had adopted Greek beliefs.

Maccabee was a charismatic figure who riveted the Jews, a superb strategist and tactician, and a fanatic waging a ruthless civil war against Jews who strayed from the path.

Hanukkah is the celebration of the defeat of the Seleucids and the occupation of Jerusalem. The story is told that, to purify and rededicate the temple, a lamp had to burn purified oil for eight nights. However, the Jews had enough oil for only one night. God wrought a miracle by allowing the lamp to burn for the full eight nights. Hence, the custom of lighting candles on eight successive nights.

The point is that the Americanization of Hanukkah adopted the custom of excessive gift giving, and forgot that the holiday is a celebration of a particularly bloody war. Judah Maccabee is remembered for his strength. For example, the Israeli sports festival, the Maccabiah Games, is named after him. Others might call him a brilliant if bloodthirsty maniac, but I won’t.

The Jews faced a geopolitical crisis as the Seleucids tried to recreate the Alexandrian Empire, and the Jews were in their path. Using superior knowledge of the terrain, and superb psychology to unite the Jews, the Jews stopped the Syrians (as they are called today) cold. Either version is defensible, but I like mine better, as it points to other battles between Damascus and Jerusalem, demonstrating my historical model. It also shows the power of America over the most stubborn of souls – Jewish ones.

In our home, we have another religious festival: Christmas. I was 38 years old when first I lived in a house that celebrated Christmas, filled with pagan symbols of the winter solstice, like Christmas trees, boughs of holly and fake snow. My wife was raised a Seventh-day Adventist.

People of this faith celebrate their Sabbath on Saturday and lay claim to being the heirs of the Jews. This is, of course, impossible because the Adventists have not waged any serious military operations at this point and no one is boycotting them.

I was in a sense horrified at the sight of the tree, awaiting the wrath of the Maccabees, or at least a jagged comment from my mother, who liked my new wife but would have been appalled at a Christmas tree. I made my peace with the matter by quoting Henry IV (who doesn’t quote him?).

He said Paris was worth a Mass, which meant that if pretending to be Catholic would get him Paris, it’s a cheap price. Since my wife would not countenance anything less than a full-bore Christmas, I determined that she was worth a tree.

We negotiated the matter. She could have her tree, but I would own the top and the bottom. On top would be a large Star of David. On the bottom, where Nativity scenes are normally found, would be something I could call a Syrian village, and on the bough above it, an Israeli F-16.

This was not meant to reflect any contemporary conflict, but a celebration of Hanukkah, far more authentic than some candles aglow. It is a reminder that had the Maccabees failed (and they were indeed beaten in a battle near Bethlehem), the story of Christ would be far different.

My argument was that by God empowering a particularly intense Jew, He set the stage for Jesus, who was born and loved on the ground the Maccabees fought for, and who purified the temple and expelled the apostates, just as Christ did with the moneychangers. Without Judah Maccabee’s divine madness, the village of Bethlehem would have spoken Greek.

And so, peace was made in our home, and our new marriage preserved and flourished. It united a man with a soul common to the Maccabees and a woman who, if not saintly then close enough for government work, performed a miracle – a marriage that celebrated the birth of Christ and effective guerrilla warfare. Indeed, I was introduced to Australian Christmas carols, which, if you have never heard them, is a must. Try “Six White Boomers” for a taste.

There are two deeper points I want to make. The first is that the intertwining of Judaism and Christianity is far more complex than many would appreciate. There is an inseparability that is noted but not really plumbed by either. The Jew sees the Christian as the assimilator of paganism.

The Christian sees the Jews as the people who were given God’s gift and rejected it. It is like a bad marriage. Each of them sees the failures of the other without grasping how inseparable the two are.

The other point is about America, the country I always marvel at. The Jews were able to come here and redefine Hanukkah as a benign celebration of God’s gift of seven extra nights of oil.

The Christians could come here and, despite their overwhelming power, make room for the people who rejected Jesus.

The commercialism of America is decried for having eroded the precious past.

Probably so, but it is noteworthy that it has also softened the differences.

Hanukkah is about war and vengeance; Christmas is about God’s love for man, imposed by political force for two millennia.

For Americans, the burning question is whether Amazon can get their gifts there on time.

There are far more terrible things to obsess over.