Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Author: Ian Welsh Page 5 of 422

London & New York Are Toast

By

On September 24, 2025

Comments

Stumbled across this recently: 

  • China aims to become custodian of foreign sovereign gold reserves to strengthen its standing in the global bullion market, according to people familiar with the matter.
  • The People’s Bank of China is using the Shanghai Gold Exchange to court central banks in friendly countries to buy bullion and store it within the country’s borders.
  • The move would enhance Beijing’s role in the global financial system, furthering its goal of establishing a world that’s less dependent on the dollar and Western centers.

Remember when the US stole Venezuela’s gold? Remember when the West “froze” Russia’s reserves, including gold?

Actions have consequences. Since most countries do more trade with China than with the US, let alone the laughable UK, and since China appears a lot less likely to steal one’s reserves, this rather makes sense.

China does almost half of its trade now in Yuan, and the the remaining is often in local currencies. (The Russians pay in rubles, for example.)

When  you add in the trade flows, and bear in mind this is 5 years old and today China has overtaken in more countries…

Well, why exactly would you use US dollars for trade, or use New York or London as your primary foreign banking center? You’d be a fool if you did so, if you’re outside of the West+allies (Japan, South Korea, Taiwan.)’

The US stock market is also VASTLY over-valued. There hasn’t been a proper market correction which was allowed to stick in generations. The idea that US public companies are worth more than China’s public companies is ludicrous. As the actual world economy is now centered on China, not America, this will become unsustainable, because the US dollar is going to copy what happened to the UK pound over the 20th century, and the US will no longer have currency seignorage: if other countries don’t want it, the US can’t just print it without massive and crippling inflation.

This means the eternal rising market created by Greenspan and treated as sacred by every President and Federal Reserve Chairman is in its last gasp. No matter how much they will wish to prop it up, they won’t be able to without crippling side-effects beyond what can be papered over by printing more money and giving it to rich people. (All of this before the fact the stock market is currently an AI circle jerk, with companies buying NVidia chips for AI and NVidia then investing in those companies. When AI turns out to be an ordinary tech, useful for some things but not revolutionary, BOOM.)

Meanwhile:

This is a big deal. This is what GE and Siemens sell. Now there are Japanese and Korean and Chinese suppliers, but this a key technology. And Iran can make it now. GE has the largest installed base, followed by Siemens (German), but why court sanctions risk and repair parts being cut off?

When the Ukraine war started, Siemens withdrew from Russia, and refused to maintain already sold turbines.

Woops.

Again, core tech that used to be controlled by the “North” is spreading across the world. Hell, the Houthis are making their own farm combines!

And it’s China where the future is happening, including the Jetsons future:


The US isn’t even on this technology, let alone moving to scale. Let me remind you of the rule of Industrial dominance:

When there is a dominant industrial power (Britain to 1860, America from 1920 to 1965) you have to be ahead in tech to compete, because the dominant power can always scale cheaper than you.

This is an industry where the US and Europe aren’t even on the playfield. Worse (or better), it’s the sort of industry that, in wartime, can easily be converted to military production.

We’ll end with one more chart:

It’s over. It’s all over. The West is sinking into industrial and technological second place and it’s a second place that is long way behind first place. Further, massive US research cuts and a monomaniacal obsession with one tech (so called “AI”) indicate that the US isn’t serious about catching up, but has accepted its decline, whatever the political rhetoric may be.

This leads to the end of the American Empire, to vassals pulling away, and to a massive and sustained loss of standard of living, just as it did in the UK. Combined with ecological issues, I expect the American experiences of decline to be faster and worse.

***

I appreciate everyone who donates or subscribes to keep this site (and Ian) running. Readership is up over 40% this year, and I’m very grateful. If you want to help the blog, please share the articles you like and if you can afford it, and like the content, please Subscribe or donate.

Why Trump’s 100K H-1B Visa Fee Won’t Work & How To Make It Work

By

On September 23, 2025

Comments

So, I’ve long had issues with H-1B Visas, and all types of guest-worker visas. Not only do they take jobs from natives, in many cases (but not all), they create a class of workers with limited rights. Bosses don’t just want guest workers because they are cheaper and drive down wages, but because they can be mistreated. No job, no visa, and the time to find a new one is short: sixty days in the case of H1-Bs.

The idea behind Trump’s fee, I assume, is to make it so that companies will hire more Americans. Adding 100K makes it so that, in most cases, companies should only hire workers when they really can’t find a qualified America.

The problem is that big multi-nationals, the folks who use H1-B’s the most, mostly hire workers for jobs like IT and research which don’t have to be done in America. So, instead of hiring Americans, they’ll most likely just move the jobs and facilities to other countries.

The solution is an extraterritorial tax. (America does these all the time, it can be done.) Simply tax the firms no matter where the workers are, and crack down on foreign contracting companies by taxing companies which hire such contractors.

This is radical, to be sure, a lot of large companies don’t pay tax, after all, and you’d have to set it up so they can’t avoid these taxes, no matter how many offsets they have or where they hide their money.

This can be done. The idea that America can’t force offshore banks to give the IRS any information it wants is ludicrous. They broke Swiss banking secrecy, they can break Panama’s and Ireland’s. A few nasty threats, if sincere, would work. Heck, the US invaded Panama not so long ago and some simple bank sanctions would make it so that money can’t move out of banking havens.

This isn’t done, and won’t be done for the simple reason that the bipartisan consensus is that corporations, especially big ones, shouldn’t pay much tax and that it’s OK to let them get away with tax avoidance. The US is still their biggest market, they can’t leave it and the US can bring them to heel any time it wants. (Where are they going to go? Europe will do what it’s told and they don’t want to live in China or Russia.)

Implementation matters and even when Trump has a good idea, he doesn’t think it thru. It’s also true that in some fields (medicine, for example) the US just does not produce enough professionals. If you want to cut back on foreigners doing those jobs, you need to train more workers domestically.

Trump’s one of those executives where you mostly don’t want him implementing your ideas (tariffs) for example, because he’ll screw them up and discredit them. That’s what happens when you elect a corrupt, incompetent senile old man who doesn’t have competent advisors and enough sense to let them run the government.

***

I appreciate everyone who donates or subscribes to keep this site (and Ian) running. Readership is up over 40% this year, and I’m very grateful. If you want to help the blog, please share the articles you like and if you can afford it, and like the content, please Subscribe or donate.

 

Is Trump Taking Ownership Stakes In Companies Bad?

By

On September 22, 2025

Comments

So, Trump took a 10% stake in Intel, in exchange for releasing almost 9 billion dollars of subsidies without requiring Intel to meet various milestones.

Is this bad?

Let me tell you a story. Once upon a time the US government gave loans to both Solyndra and Tesla. Without those loans, neither company would have had a chance. Solyndra (solar panels) went bankrupt and people screamed that the US government shouldn’t have subsidized it. Tesla made bank and paid back the loan.

Loans or subsidies without an equity stake, mean that the government is exposed to the downside (loss of all the money loaned) without being exposed to the upside. Imagine if the US had taken a ten percent stake in Tesla? Even if it sold it off over time, it would have made huge bank. Just like being a VC, the government could take equity stakes in a lot of companies that are startups or trying for turnarounds. Even if most fail, if a few succeed big-time, then they will more than make their money back.

Now in the old days this wasn’t necessary. Why? Because there were high taxes on companies and rich people. If a company got rich because the government helped, the government was going to get its money back. But with effective corporate tax rates so low and so much legal tax avoidance, in many cases corporate tax rates are effectively zero. So if the government is going to help a firm directly, it needs another way to benefit from the upside and not just take on the downside risk.

So, for once, Trump has done the right thing and in a way that isn’t a complete fuck-up. This policy should be expanded. (Next we’ll discuss why the $100,000 B1 Visa scheme won’t work, and how it could be done right.)

***

I appreciate everyone who donates or subscribes to keep this site (and Ian) running. Readership is up over 40% this year, and I’m very grateful. If you want to help the blog, please share the articles you like and if you can afford it, and like the content, please Subscribe or donate.

Open Thread

By

On September 20, 2025

Comments

Use to discuss topics unrelated to recent posts.

American Billionaires Are Competing To Be King Shit of Turd Island

By

On September 17, 2025

Comments

You may have heard that Tesla’s board has proposed giving Elon Musk a one trillion dollar payday. Tesla is falling apart, and the ostensible theory is that only Musk can save it, as if he’s not the guy who ran it into the ground with his bad decision making.

Elon, of course, is currently “the world’s richest man” but his fortune is probably under 500 billion. So he wants to triple it.

This, as you may have figured out already, is not about saving Tesla, but looting it before it crashes out completely, which is what’s going to happen. Only 100% anti-china EV tariffs are keeping Tesla alive right now, but the problem is that non-Chinese companies are now producing cheaper, better cars and no, Tesla isn’t going to regain its lead.

Elon is just a rat trying to leave a sinking ship with a huge wheel of gold embossed brie, and the board (his cronies) are helping him.

Meanwhile:

(Every person who told you that the end of dollar hegemony was impossible was either an idiot or lying to you.)

Oh, and meanwhile China has banned all its tech companies from buying NVidia AI chips. Seems they figure their homegrown chips are now as good as the lobotomized versions NVidia is allowed to sell to Chinese companies.

In about three years, China’s chips will be as good as NVidia’s. In about six years they’ll be as good and a lot cheaper. Then every country outside the West will switch.

Meanwhile, as I’ve discussed before, every non-Western country will use Chinese Open Source AI, because using American or European AI is way too risky (if you don’t understand why, you’ve been a coma for the past 40 years.)

NVidia is driving something like 40% of American stock valuations and AI is the huge bet America is making. America can’t even make magnets.

So what happens when China can produce essentially everything the West can, at equal or better quality, and it costs less? Passenger jets, military tech, chips, AI, robots, drones, cars, consumer goods. Everything. (or a reasonable facsimile, well north of 90% within five to ten years, and it’s already north of 80%.)

Well, the oligarchs who have been competing to be the richest guy in America are going to find they have a whole bunch of US dollars that the most important economy in the world, China, won’t accept for anything meaningful. You won’t be able to buy Chinese companies with it. You won’t be able to buy Chinese tech secrets with it. Chinese scientists won’t want to work in the shithole that the US is turning into, especially given all the racism against Chinese.

American oligarchs will, as my father put it, find out that they were competing to be “King Shit of Turd Island.” Like being the world’s richest Indian in 1950. You’ll live a nice life, but you don’t matter.

Serious elites have three jobs, in order of importance.

  1. Keep their country powerful and advanced and important;
  2. Keep control of their country
  3. Compete among themselves.

American elites reversed the order of these tasks for generations. They’ll be lucky to avoid a civil war, is how badly they’ve fucked up. And the tech-bro “masters of the universe” are about to watch China roar past them and gain the tech lead in everything that matters. They can own America’s Tik-tok, but who cares, because America is a has-been nation, coasting on legacy fumes, and it’s only going to fall further and further behind.

Thiel and Musk and so on are just crabs in a bucket, competing for power in country going to Hell. May the best most ruthless crab be crowed King Shit of Turd Island.

***

If you’ve read this far, and you’ve read some of my articles and most if not all of Ian’s, then you might wish to Subscribe or donate. Ian has written over 3,500 posts, and the site, and Ian, need the money to keep the shop running. So please, consider it.

Open Thread

By

On September 13, 2025

Comments

Use to discuss topics unrelated to recent posts.

Should You Kill or Mourn Nazis and Commies? (Charlie Kirk Edition)

By

On September 11, 2025

Comments

My favorite Charlie Kirk quote is:

I can’t stand the word empathy, actually, I think it’s a made up new age term, and it does a lot of damage.

But Charlie wasn’t just a one-note ideological thinker.

I think it’s worth to have a cost of, unfortunately, some gun deaths every single year so that we can have the Second Amendment to protect our other God-given rights. That is a prudent deal. It is rational.”

Kirk was, needless to say, all for the Gaza genocide, but he was for it by lying about it. Most famously, he denied starvation in Gaza.

Anyway, Kirk was an evil, pro-genocide douchebag, who was shot, which he said was an acceptable price to pay for the second amendment. I’m not going to waste crocodile tears on someone who actively worked for the mass murder of civilians and who died in a way he thought was an acceptable sacrifice.

But we need to unpack this properly. One thing commenters on the right have been saying is that Charlie may have died, in full of in part, because of neo-liberals and the left calling him and people like him Nazi or fascist.

Now I don’t know the motives of who killed him, but in our society many people do genuinely believe that killing Nazis was justified and the right way to deal with them. There’s a version that swings left, of course. “The only good Commie, is a dead Commie.” The Black Book of Communism and the constant reminders of deaths under Mao and Stalin are meant to justify this sort of hatred, as reminders of the Holocaust and German war crimes are to justify killing Nazis.

So the right isn’t wrong. If you call someone a Nazi there’s a certain subtext where “and killing him would be justified” is implied. Fascist is weaker, but same general idea.

But the reverse version is Communist/Marxist/Socialist. The right calls their enemies this all the time and it has the same implication. “Cultural Marxist” was the battle cry used by people like Kirk to justify purges of the university system of left wing professors.

I don’t want to imply these are mirror phenomena. The fact is that since the early 20th century being Communist, Marxist or Socialist has been much more likely get one fired, jailed, deported, beaten or killed than being a fascist. Indeed, there was a huge taboo against calling anyone a Nazi, so much so that doing so was considered “losing the argument.”

It took a lot of boundary pushing in the right for that taboo to be partially broken.

Back in 2016, during Trump’s first run for the Presidency, I wrote that constantly calling him a fascist or Nazi, and branding resistance ANTIFA would naturally lead to violence, because if someone is a Nazi, violence isn’t just justified to stop them, it’s a moral imperative to use any means necessary including violence to oppose them.

But in America, the same is true of stopping Communism or socialism or Marxism. And the same is true of calling Abortion a holocaust.

So what’s happened here is that the shoe is now on both feet. The right had their Commies and their abortion Holocaust to justify their actions. Now the center has Nazis and the left has Nazis and the Gaza genocide to justify their violence.

By their lights, all three sides are justified in violence. If Commies and Nazis and Genocide are true evil, and if all sides have committed genocides and are Nazis (right) and Commies (left/center) then, indeed, it is ethically required to use any means necessary to stop them.

What we’re seeing right now is a cry from all the “responsible people” of “don’t resort of political violence! It’s never justified!” (This in a country formed by violent revolution, who’s almost always mass murdering people for political reasons.)

But the issue is that the right and, actually, the center, are acting like fascists, at the least, and really like Nazis. (That whole inconvenient genocide thing.)

The right’s case is weaker, unless you do view abortion as a Holocaust, in which case, yes, you are hard pressed not to find yourself wondering why you aren’t murdering the abortionists. Neoliberals aren’t left wing, socialists or communist and there are no socialists or communists anywhere near power in the US. The right calls neoliberals the left and pretends “cultural Marxism” is Marxism, so they’re really Stalinists, which is ludicrous to anyone who knows the politically correct crew that the right calls “cultural Marxists.”

If you want avoid domestic political violence over these issues (though it’s all really a proxy for the impoverishment of the majority of the population) you either have to decide that being a Nazi (pro genocide, pro gestapo/ICE thugs) is OK, or stop being a Nazi. On the other side, you have to give up abortion or decide that it isn’t a Holocaust. And since “cultural Marxism” is really proxy for a series of policies meant to help women and various racial and sexual minorities, you have to decide whether prejudice, including legal prejudice against them is OK (Issue one) and whether or not they deserve any sort of helping hand (a separate issue. You could keep them legally equal and let them keep their rights like gay marriage and the female vote but get rid of affirmative action and so on.)

In other words, to avoid political violence over ideology, you need to have the vast majority of the population agree on what is acceptable. Is genocide is OK? Abortion? Affirmative Action. Women having the vote? (Peter Thiel, who bankrolled Vance, has suggested women shouldn’t have the right to vote.) Gays marrying. People being able to choose their own gender. Police raids by badgeless masked men without warrants from unmarked vans.

If people don’t agree on what is right and the red lines being crossed are of “this is a holocaust” or “this is completely destroying millions of people’s lives” then of course it’s going to break out into political violence. Expecting otherwise and hand waving that “we should kill over difference in opinion about whether it’s OK to commit genocide” are ludicrous and pathetic and foolish.

There’s political violence because Americans disagree over life and death issues as large as, but not limited to “should we commit genocides?” Well, again, that and general immiseration, which lowers the ignition point.

If you don’t want political violence, don’t wag your finger and say “political violence is bad, ‘kay”, either agree as a society to be a bunch of Nazis with an immiserated population, or decide not to be Nazis and make sure that almost everyone has a good life.

As for Kirk, I’m glad he got a death in line with his beliefs: making the ultimate sacrifice for the right of Americans to bear arms. It was “worth it” and I will assume he meant that, and if he still exists he’s at peace, having died for what he truly believed.

***

If you’ve read this far, and you read a lot of this site’s articles, you might wish to Subscribe or donate. The site has over over 3,500 posts, and the site, and Ian, take money to run.

 

A Brief Taxonomy Of Corruption

By

On September 10, 2025

Comments

I was discussing Indian corruption with Sean-Paul the other day, and we had to really break down what we meant by corruption. That lead to a simple classification system, so I’m sharing it with it.

Everyday vs. Elite Corruption

Do you bribe the policeman or the minor bureaucrat to get a permit. Do you grease everyone with even a tiny bit of to get what you want, and it is it expected? Is it essentially required, in the sense that if you don’t consequences are nasty: arrest or or dential, Or at best, whatever you needed done taking forever and being shoddily done.

This is everyday corruption. India is rife with it. America, mostly, doesn’t have it. Russia used to have it, but I’m told by Sean-Paul, that at least in Moscow, it’s now gone.

Elite corruption is when the elites are self-greasing. Whenever anything is done, it is done in a way where somebody rich can take a cut. Contracting to build new infrastructure is where the contracts are inflated is the standard, but there are tons of variations. Most Western nations have this. The US or the UK is probably the worst among major countries. But it exists in Russia and (though much less than before) in China.

Honest vs. Dishonest Corruption

In honest corruption you get what you pay for. In everyday corruption your visa gets stamped, your parking ticket disappears, you get the permit you needed, or city workers show up and connect your new place to power, water and sewage. At the elite level, if if a bridge, or hospital or park or space program was promised, it is delivered on time and on budget. It’s just that the budget includes 10% grease. Some other games may be played. If you know where new facilities will be built you could, say, buy up property that will soon increase in price, then sell once it does.

But bottom line, what is delivered at the end is delivered on time or with minor delays and it works. It’s not shoddy. China during most of the Deng period had a lot of honest elite corruption. Everyone was taking a cut. But they bloody well had to deliver and if they didn’t, they lost their place at the elite table and might even end up in prison or executed. American in the late 19th and early 290th century mostly had honest corruption. Tammany Hall was corrupt, but they also kept their promises. The great railroads and bridges and parks got built, and were generally built well and on time.

Dishonest Corruption Is when you whoever is corrupt doesn’t have to deliver. You pay off the cop and he throws you in jail anyway. You bribe the bureaucrat and he still drags his feet getting you approval, if you get it at all. The first payment is never the last payment, the idea is to drain you of as much as possible.

At the elite level dishonest corruption is that the street or building was promised and funded but somehow either never gets finished or takes twice as long and three times as much and then, once done, it usually turns out to be shoddily built. A new program for veterans/homeless/cancer/whatever is promised, but somehow it’s slow and ineffective and doesn’t do much, but a few people make a lot of money off of it. Promises mean nothing, nothing is delivered on time and what little is delivered is of crap quality. Meanwhile insider trading is everywhere, taxes always go down on the rich and up on the poor and middle class and programs which used to work are slowly degraded into uselessness so that someone can make more money.

This is the US or the UK and Canada and indeed all neoliberal countries. It’s actually more or less the definition of neoliberalism. Effectiveness is nothing and efficiency is really only about how efficient something is at funneling money to the rich. It is also India, which is why India is, despite some progress, still screwed. It’s run by criminals from top to bottom. Ironically, in my experience (which is out of date, I’m happy to be corrected) low level Indian corruption is “honest’ in that you get what you pay for. High level Indian corruption is dishonest as hell. No big project ever works properly, comes in on time and is effective. (This is why I’m still negative on India.)

There’s also a middle corruption, slice for everyone. This is where everyone involved in the project gets some. So the workers get some, the managers get some, and the contractors gets some. Everyone is being greased. This doesn’t mean just having a job, it means being paid better and treated better than at a non corrupt job.

The honest and dishonest versions are as normal. Honest “slice for everyone” corruption still delivers what was promised at reasonable quality. Dishonest “slice fore everyone” doesn’t deliver or delivers absolute crap.

Obviously no corruption is best, but equally obviously honest corruption is better. If you have to have any corruption, then honest elite corruption or honest slice for everyone corruption is best. Low level corruption is always bad, since it means “if you don’t have money, you’re never treated fairly and you can’t break out of the bottom” but if you must have it honest is better than dishonest.

Growing up a lot in what was then called the third world, then observing politics for years all of this has been well known by me, but I never really broke it down properly, it was pretty much “implicit knowledge” as much that we learn young is.

For your reading displeasure.

***

If you’ve read this far, and you read a lot of this site’s articles, you might wish to Subscribe or donate. The site has over over 3,500 posts, and the site, and Ian, take money to run.

Page 5 of 422

Previous

Next

Powered by WordPress & Theme by Anders Norén