Use to discuss topics unrelated to recent posts.
Author: Ian Welsh Page 5 of 439
Stumbled upon this chart of US corporate profits vs. corporate taxes. The important part isn’t the taxes, it’s the profits. (Note that this is nominal and doesn’t include inflation adjustment, not that American inflation numbers mean anything anyway.)
Now let’s look at another chart. This one of his how much profit companies that produce actual products (aka. not finance, insurance and so on) make per dollar of GDP added.
Notice that the long term rate through the “good” period of American prosperity (where there was a huge middle class and wages rose at the same rate as productivity) is pretty steady, and never goes above about 13cents to a dollar. It starts rising around 76 (Carter, who was very neoliberal)and continues a sustained rise, with a huge spike after Covid.
What you see in America are constant fears of inflation. Every single BLS adjustment to inflation rate measures that I am aware of since 1980 has had the net effect of reducing stated inflation. The real inflation rate in America is massive.
Meanwhile, in China, the constant fear is deflation.
Why? Because China has competitive markets and America does not. Barriers to entry are high, and everyone is looking for high profits thru barriers to competition. American firms took economic studies that showed that in competitive markets profits were low and spent all their time trying to make markets un-competative so they could have high profits. This mostly meant capturing government, because it is government regulation and enforcement which keeps markets competitive.
China wants competitive markets in most sectors, except those which provide public goods. They are aggressive about it. Chinese firms compete on quality and price and often engage in price wars, so much so that sometimes the government steps in to stop them from driving themselves bankrupt. Last time I checked the the EV manufacturing market I found over a hundred companies. The competition is savage.
So Chinese companies have low prices, “over production” and constantly introduce new models and products to try and either increase quality or price. Tesla goes years between new models, Chinese companies sometimes introduce multiple new models a year.
Everyone wants to get a share of high US profits, that’s one reason why money floods into the US. But US companies have become uncompetitive. They keep effectively shrinking: more profits, sure, but only by slowly, then quickly, destroying the companies. This is why the US has 100% tariffs on Chinese EVs, if they let them in at all. And now they’re losing their foreign markets, as Europeans and Canada start letting in Chinese EVs.
The story is similar in most industries. America and Europe can’t compete. Period. Because instead of trying to be competitive, they’ve tried to create non-competitive markets and then soaked their customers as hard as possible. This works, till there isn’t any competition, or until you destroy your customers, who are also your employees, because US companies have also been keeping wage increases for everyone except executives and a few key employees (used to be programmers, but they’re about to get it in the neck) below price increases.
And this is how you wind up with 50% of all spending being done by 10% of the population, making most of America’s population economic cripples. It’s why you can’t afford tickets to a rock concert or a sports game, even though those were once solidly middle class pursuits and affordable to the poor.
This is a specific example of a general rule that you can always extract more profit if you’re willing to drive your company or your country into the ground.
About 20 years ago I wrote an article titled “there was a class war. The rich won.”
They’re still winning, but by doing so they have destroyed America’s place in the world, and indeed, the entire West’s. Hundreds of years of Western dominance are coming to an end because these greedy bastards wanted high profits for fifty years, and didn’t care what they did their country or most of their fellow citizens.
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Update 3: Attacks continue on Lebanon and Iran, from Israel. Iran let two ships thru, then closed the Strait again. The original announcement from Pakistan said that Lebanon was part of the ceasefire, but then Israel said it didn’t, and now Trump says the same.
As ceasefires go, this isn’t one. I’ll probably write a new article when the situation becomes more clear, but so far the “Israel has Trump on a leash” hypothesis looks strong and the “Iran will not agree to a ceasefire” point looks like only needs to be modified to “no ceasefire is possible until Israel is beaten into the ground.”
Update: I’ll leave this up, but there’s a ceasefire, which I didn’t expect. Three possibilities:
1) Iran is getting the deal it wanted, and won the war.
2) They’re making a mistake.
3) Quite possible that Israel blows the ceasefire up.
Update 2:
This is Iran’s statement, if Trump did agree to all of this Iran just won:
In this plan, America is fundamentally committed to guaranteeing non-aggression, the continuation of Iran’s control over the Strait of Hormuz, the acceptance of enrichment, the lifting of all primary and secondary sanctions, the termination of all resolutions of the Security Council and the Board of Governors, the payment of Iran’s damages, the withdrawal of U.S. combat forces from the region, and the cessation of war on all fronts, including against the heroic Islamic Resistance of Lebanon.
However Israel has said they will not cease attacks unless Iran opens the Hormuz, and they will continue attacks in Lebanon. In principle the agreement is between the US and Iran, and doesn’t include Israel, so Iran could just re-target all the drones and missiles which would have been used to America and Gulf States to Israel. Given Israel appears to be withing a few days of running out of interceptors, I think it’s clear who’d win that. I hope they do, and don’t abandon Lebanon. If they do, we’ll see how much control Israel has over Trump.
First, the war was started by America and Israel, not by Iran. There was no threat from Iran. This makes starting the war a war crime, the same crime for which many Nazis were hung at Nuremberg.
Second, there is no evidence that the Iranians had or were trying to get nuclear weapons. This is the consensus of the American intelligence community, who were under ferocious pressure to find otherwise.
Third, every person who condemns Iran without noting that that America started the war discredits themselves.
Fourth, every person who condemns Iran’s attacks on Gulf States without noting that the reason those states are being attacked is that they allow the US to launch attacks from their territory, discredits themselves.
Fifth, Iran has clearly stated that all the Gulf States have to do to stop being attacked is to stop allowing attacks from their territory and stop allowing Americans to have bases there.
Sixth, by both international law and by common sense, if you allow attacks on a third country from your country, you are a co-belligerent, whether or not your own military is involved. This matters specifically because the closer air power is to where they’re bombing, the more often they can bomb. The bases also matter because they hold (or did, till the Iranians destroyed most of them) communication and radar systems which aid America.
Seventh: If the Bushehr nuclear plant has had missiles land as close as the auxiliary building. The Russians have taken the threat so seriously that they have withdrawn their technicians. It is on the coast and if there is a containment breach, given the prevailing winds, fallout will contaminate the Persian Gulf. This will end desalination, which is how the Gulf nations get almost all their drinking water. It is also likely that the radiation will make the UAE and parts of Oman uninhabitable. All the oil from those regions will never be usable again.
Notice that such a containment breach will damage America’s allies far more than Iran. The map above is only partly accurate, the winds change and often blow south or west and not just southwest. Iran does have blocking mountains which should protect it quite a bit, but radiation is nasty stuff.
Eighth: Iran is capable of entirely destroying Israel. If nuked and possibly in the case of a containment breach, the majority of their arsenal will continue to exist. It is almost all hidden in deep underground mountain missile bases. In such a case Iran can retaliate by:
- Destroying Israel’s desalination plants, which provide 80% of the drinking water;
- Hitting the Dimona nuclear reactor and causing a breach would render Israel (a very small country) uninhabitable; or,
- Iran has enough 60% enriched uranium to make dirty nuke bombs and send them by missile. Once again, this would make Israel uninhabitable.
Iran does not need nukes to destroy Israel. It can do so any time it chooses and this is a fact which American and Israeli planners seem to discount. Iran is a fairly ethical nation as nations go, and they also don’t want to kill Palestinians and Lebanese. But there are 32 Mosaic commanders. If Tehran is nuked, well, all it takes is for one of them to decide to get revenge.
Ninth: At this point Iranian missiles are getting thru a lot, because interceptor stockpiles are depleted. Claims of high interception rates are as believable as similar Ukrainian claims.
Tenth: it is not possible, absent perhaps dropping many nukes, and perhaps even then, to take out Iran’s ability to launch missiles. And even then if any are left, well, it won’t take many to wipe Israel off the map.
Eleven: Iran is not going to sign a ceasefire deal, because they know that Israel and the US will keep assassinating their leaders and eventually launch another war. Well, I was WRONG. I suspect Iran’s making a mistake, but we’ll see. Iran is saying Trump accepted their 10 point proposal, if so Iran won the war and this ceasefire makes sense.
Twelve: There can be no peace deal which leaves the US any bases in the region, because the US is, to use the delightful Russian phrase “agreement incapable.” The US has never kept any agreement it didn’t feel like keeping and it certainly won’t do so with Iran. Any promises to never attack again and stop assassinations cannot and will not be trusted by Iran’s leadership. This means Iran must win the war decisively, in a way that makes it as difficult as possible for the US to attack again (no bases in region) and Israel too scared to do so because they know any attack or assassination will mean immediate and savage retaliation.
Thirteen: The Iranians have included Lebanon and Hezbollah in their demands: Israel will have to withdraw from Lebanon and stay out and not bomb it ever again. Again, this is a maximal goal and requires a complete victory.
Fourteen: Iran is never giving up control over the Strait of Hormuz. This is especially true now that their industry and civil networks have been hit hard. They will need a lot of money to rebuild. They have also said they want reparations. I don’t think that will happen, but I could be wrong. The more damage the US and Israel do, the more Iran is incentivized to use Hormuz as a lever to get money.
Fifteen: A side effect of this war is that weapons stockpiles have been drawn down from the entire world. There was never any possibility of the US winning a war with China, there is no longer any possibility of even fighting such a war.
Sixteen: None of the weapons being used up can be replaced in any significant numbers without Chinese materials, and even if China cooperates it will take at least a decade to rebuild credible stockpiles.
Seventeen: Iran has pushed the Americans back significantly. Their sortie rate has dropped, and they are running out of stand-off munitions. That means they have to fly closer and risk their planes, and if they insist on using Gulf bases they risk planes being destroyed on the ground, as has already happened.
Eighteen: Carrier groups have been forced back to maximum range. They are no longer the Queens of the Sea, and it is not credible that they could be used against China or Russia, both of whom have longer range missiles and in the case of China, enough to simply deplete the entire carrier group’s interception missiles.
Nineteen: Barring the use of nukes, Iran will win this war. The longer it takes and the more damage that is done to them, the more they will use their control of Hormuz and their ability to hit any Gulf State, to obtain the needed reconstruction funds and assistance.
Twenty: Internationally this war is the end of the American global Empire. Everyone knows how to defeat them now. They will retreat to the Americas and try and push around local states. China and Russia are big winners, Europe’s deindustrialization will accelerate and Europe will continue its descent into a meaningless backwards and poor region.
Twenty-One: The economic impact of this war, even if it stopped today, would be bad enough to cause a major worldwide recession. If it continues, we will see economic devastation which will last for years. There will be famines. There will be brown outs and blackouts. Jet travel will only be for the wealthy. International trade will crater due to lack of bunker fuel and most goods will rise in price and/or become rare, how much so depending on where you live. Price increases will be much higher than necessary in the Anglosphere, in particular, as oligarchs use the excuse to jack up prices even more than they need to and governments do nothing to stop them. The AI bubble is most likely toast. Oh, and prices of all devices with chips in them are about to soar throught the roof.
***
This was and is a stupid war which neither Israel nor America should have ever fought. It is an endless series war crime, with deliberate and extensive attacks on civilians and repeated genocidal threats. It has demolished what little credibility remained in the West, as leader after leader condemns Iran and somehow leaves out that America started the war and that Iran’s attacks on infrastructure were retaliations after their infrastructure was hit. It is going to cause economic catastrophe, kill millions from hunger and power disruptions, and if Trump goes completely insane it could lead to the end of Israel and Iran both.
I’ve always said the stupidest war in history was World War I, the “Great War.” But this one may wind up taking the crown.
Finally, if the US had a functioning government, Trump would be impeached or removed under the 25th amendment. It does not, and this war has made that clear. There is no possibility of making deals with America and the only sane policy for every nation in the world is to disengage economically and militarily as quickly as they can while trying to avoid an American attack.
(A small laugh after a grim post)
I don’t care. This is hilarious. 😂 pic.twitter.com/QC13l96YoD
— Freyja™ (@FreyjaTarte) March 30, 2026
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Smart people can’t handle Trump. He say something, or does something. On the face, it seems stupid, so they go into pattern matching over-drive, looking for a reason.
You see it with the “they’re attacking Iran to screw up China’s access to oil and because America has so much oil and natural gas now.”
Well, yes, but the US is near peak unconventional oil and natural gas, production will soon start declining and the collateral damage from the Iran war is so severe it’s going to send the US into a recession so severe it’ll look like a depression, because it isn’t just about oil, it’s about fertilizer and helium and supply chains being completely wiped out.
It might be that this is Trump’s “plan” and it’s just a stupid plan, but if that was it, he’d have drawn back when it became clear that the attempt to replace the Iranian government with a compliant one, a la, Venezuela, had failed.
Or we have this:
He’s lying, but I still can’t figure out what his goal is with this. It clearly contradicts the pilot’s search version and points to a defeat and retreat of that aircraft convoy.
This makes absolutely no sense. https://t.co/W6ehrJR3z1— Patricia Marins (@pati_marins64) April 6, 2026
I’ve been following Marins for a while, and she’s a smart gal. But that’s the problem. Smart people look for patterns, and assume people have goals that make sense to them.
Trump doesn’t have goals like that. You just have to listen to his word salad speech. He’s incoherent, almost certainly suffering from dementia, and to the extent he has goals they are goals like “feel good” and “have people praise me” and ‘never be seen to lose.” I dislike psychoanalyzing public figures, but he’s almost certainly a narcissist
Smart people can’t handle this. There’s got to be a smart plan hidden somewhere in the word salad.
Sometimes there is, but it’s never Trump’s plan, it’s the plan of someone who has some influence over him. But that doesn’t matter, however smart that plan is, Trump will fuck it up, because Trump will never leave someone else alone to execute, he’ll always interfere. There’s a smart plan for tariffs, for example, but that was not going to happen with Trump deciding tariffs on the fly and depending on which foreign leader he was upset with that day, nor with him insisting on undoing all the industrial policy Biden’s people (not Biden, but his people, because he would leave them alone to execute in many cases) had put in place.
“recall ive told you ,, I have met some very bad people ,, none as bad as trump. not one decent cell in his body.. so yes- dangerous.”
There is no clever plan. There never was one. There never will be one. Trump has morally neutral virtues, or did, like the ability to manipulate people, a certain type of charisma and before his decline, massive amounts of energy. The primary difference between the first Trump term and the second is that his health has declined severely and his dementia is far more advanced.
But coherent plans? No. Trump, even when he was much younger and healthier, managed to drive a casino into bankruptcy.
A casino.
There is no plan and no, not even the deep state can carry out a coherent plan thru Trump. Even Netanyahu, who has him by the short-and-hairys, only has partial control, and certainly not day to day operational control.
If some random stranger talked like Trump you’d assume he was mentally damaged and you’d be right. His being President doesn’t change that.
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I see a lot of discussions about how to read more. Most of them are of the flavor of “I know broccoli and liver are good for me, but I hate how they taste, how do I eat more?”
This leads to people who are proud they read a book a month, or maybe a week, numbers that make actual readers, who often read a book a day, laugh. By the time I was ten, I was reading about fifteen books a week. (I know because I know what the library lending limits were.) I didn’t do it because it was good for me, I did it for fun.
Even in non fiction, find something you’ll enjoy reading. Love knights and chivalry? Plenty of books. Food or cooking? Same. Seashells? Music? Math? Hunting? Anime? Weird esoteric shit like the different breeds of sheep or the history of whale hunting? Whatever it is, there are books on it. Probably many books, even for niche interests.
Then there’s fiction. I read fiction because I enjoy a break from being Ian and/or living in this particular world. That’s why I read a lot of science fiction and fantasy, but I read all genres, even some romance novels. The Regency romance novels of Georgette Heyer are often both funny and touching and you’ll learn a lot about Regency England without even realizing it, for example. (Try “The Corinthian” or “Friday’s Child” and stay away from her historical novels.)
The people who do a lot of anything either love doing it, or they’re doing it for money. (The ideal is both, but paid book reviewers are largely a thing of the past.)
If you want to be a better writer, read books by authors whose style you admire. Read the first time for fun, then re-read analytically, then write pastiches. Read a scene, put the book down and see if you can write the same scene the same way without looking.
Once you’ve done that with a few authors, try to write the a scene more than once, in each style. You can do the same with non fiction. It’s really hard to write like Machiavelli, for example. It sounds simple when you read it, but… no.
More instrumental advice. From 2018 to Covid, I wanted to get back into reading more as I’d gotten out of the habit. So I went to a coffee shop in a bookstore and didn’t take any screens except an e-reader. I’d sit and read for hours.
If you’re screen addicted, you may need to enforce some “no screen” time or set your phone so it only alerts you if key people call like your wife and ask them not to call unless it’s an emergency. Once Covid started up I read less, but I had the habit/enjoyment back.
Well, I never really lost the enjoyment. I still enjoyed it, but the dopamine twitch reflex of social media and so on had become an issue, not as fun overall, but it’s more immediate.
Reading books has a different “brain feel” than reading short form let alone social media. You just need to get a taste for it. It’s sort of stretchy — you get entire full stories or entire world models in ways articles can’t give you, let alone some social post or video.
That, I find, sparks a lot more ideas for me, and I LOVE the feeling of new ideas. Barbara Hambly once called it the the “cold clear ecstasy of intellectual discovery” and while I won’t say it’s the best feeling, it’s unique. Books really help get that.
If you want to read more: reduce your screen addiction and read books you’ll enjoy. Don’t treat it like forcing down liver and broccoli. Have fun.
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The core reason for America and Europe’s decline (and, in a way, Japan’s) was the belief by our elites that money was the only thing which mattered.
Money is the ability command resources from anyone who will, or must, sell. People who need to sell their labor or starve—Marx’s famous “whip of hunger.” Countries who must sell to get your money because you either make them militarily (see Venezuela right now and Iraq, both of which must sell their oil in US dollars and let the US treasury keep the money on account for them, then decide what they can spend it on, plus, of course the entire colonial era); or because they need to buy what you have.
For a long time the West had a monopoly on much of what you had to have: medicines, engines, planes, cars, tractors, fertilizer and so on. The Petrodollar was about having a monopoly on oil and all its products: gasoline, diesel, bunker fuel, jet fuel, plastics and fertilizer again. If you wanted electricity, well the equipment to make it came from the West too. If you wanted advanced weapons — the West, especially after the fall of the USSR.
During the early post war period you had options: you could get most of this from the West or the Soviets. But starting in the 70s, the USSR went into decline and then it fell, and the West was the only option.
Back to American elites: since everyone had to buy in dollars, and because they needed to get so much from the West, also had to sell in dollars, well having dollars was all that mattered. The more dollars, the more power.
What the elites forgot, thanks to complete retards like Francis Fukuyama, and sheer stupidity and greed was that smarter people than them had arranged the system this way: that it was contingent on the West having what everyone else needed, and having the military whip-hand.
Japan, poor fuckers, built an incredible industrial base and was pushing on taking the industrial lead. American leaders in the 80s, not having been taken over by complete retards made the Japanese sign the Plaza Accords, in which they would give that tech to America, open factories in the West and so on: give up their momentum, because it matters where you build.
As I’ve said many times, the tech lead follows the manufacturing floor: this is the LAW. Japan wasn’t strong enough to tell the US to go to hell. So they spent the last 4 decades in slow decline. This wasn’t primarily because of their big crash, though that was mishandled, but because they were no longer allowed to continue their industrial and technological snowball.
But by the 90s the last smart competent American elites were dead or retired, and the triumphalism over the fall of the USSR made them think, a la Fukuyama, that their system was superior, their shit didn’t stink, and they’d be on top forever. Everyone would have their system, and everyone would just keep buying and selling in dollars no matter what: it no longer mattered where things were made.
The key moment was when Clinton let China into the World Trade Organization (WTO) with developing world status. Western financiers (they weren’t capitalists, capitalists aren’t so stupid) looked at how cheap Chinese labor was and how willing they were to pollute and let workers get maimed, and they salivated. (And yes, lack of worker protections was part of it. One of my friends, in the 90s, visited a battery factory where the batteries were made by hand. Batteries are basically full of acid. Think it thru.)
So they sent industry to China and told themselves “well, we do the design here. That’s what matters.”
The Chinese leadership nodded, smiled and among themselves said, I’m sure, “what a bunch of suckers. Thank God they’re such idiots.”
And in learning to make all these things the Chinese learned the design and so on, and in time took the manufacturing lead. Then about 20 years later they took the tech lead decisively. Even three years ago American sanctions worried them.
(In 2023) Xi Jinping warned that U.S.-led technology restrictions posed “unprecedented severe challenges” to China’s development.
Today:
Han Wenxiu, the senior official overseeing day-to-day operations at the Central Commission for Financial and Economic Affairs (CCFEA) — the Party’s top economic policymaking body — told the China Development Forum (CDF):
“After years of effort, China’s indigenous innovation capacity has passed a critical inflection point, making it difficult for external forces to derail our development”
As for overcapacity, the Chinese are no longer apologizing for it or dancing around it. They say our companies are uncompetitive and that’s our problem.
The bet seems to be that most countries, or trading blocs, won’t get their acts together enough to materially push back against China’s export juggernaut.
- Even the U.S. tariffs on Chinese goods — unprecedented in recent history — have only succeed in diverting low-value manufactures (think toys, textiles, and fast fashion) away from the U.S. and toward new markets.
- They’ve had less impact on higher-value exports to the U.S. — either because those goods were never sold there at scale (i.e. NEVs) or were exempt from the tariff regime anyway (i.e. smartphones and medical equipment).
To put it simply, the world needs what China has and can’t make it themselves. If they can make it themselves, well, it’s much cheaper coming from China and how many Western countries are willing to take a big hit to re-start their industries, and are competent enough to pull it off? (My approximate count is zero.)
And that, folks, is the end of the Western order. No one needs to buy from us any more. They’d still like to sell to us, sure, but they don’t need to because they don’t need dollars. If it’s something they need they can get it from China or, to a lesser extent Russia, India and so on. We don’t have a monopoly on anything that matters any more: the last real one was chip manufacturing, but the Chinese are catching up fast and confident that in a few years they’ll be there. In the meantime, they can make all but the most advanced chips and those are the ones that go in almost all manufactured good: the most advanced stuff is only useful for things like AI, and China’s find its way around that.
Now we come to Iran. Iran is showing that a fairly modest kit: missiles and drones, is sufficient to keep the US navy and air force far away and make any attack prohibitively expensive in men and material. Plus everyone knows that expensive US military gear needs Chinese supplies: the West doesn’t have the full kit any more, the Chinese can and in some case have, cut the West off any time they want. All those expensive radars the Iranians blew up? Well it’s not the cost (that’s irrelevant) it’s that they require materials on the Chinese have. They get rebuilt if the Chinese let America and there’s basically nothing the US can do about that.
Keynes famously said “anything we can do, we can afford.” The corollary, as I’ve written before is that it doesn’t matter how much money you have, anything you can’t do you can’t afford—or rather you can’t afford it if the people who can do it won’t sell it to you.
America had a great thing going, for America and for its allies. But American elites got stupid and didn’t understand the actual structure upholding their power. They though it was innate to a superior system and superior people, not a structure built by very smart and ruthless people over a period of about a hundred and fifty years: a structure that required maintaining.
And so, it’s over. It’s just over and anyone who tells you otherwise has zero idea what they’re talking about.
And everyone else is realizing this. Let’s take Australia, run by ‘tards even stupider than America. Twenty years ago, they had eight refineries. Now they have two. They’re running out of diesel and even if they could get crude oil (certainly not impossible, though hard) it doesn’t matter, because they can’t refine it.
This lesson should have been learned during the Covid Pandemic when the West restricted medical supplies and the logistics system stopped delivering enough international goods.
Anything really important: fuel, machinery required to maintain your infrastructure, food, medicine, etc… is something that you should be able to make yourself. If you truly can’t, you must have huge stockpiles. I would never want a country to have stockpiles less than three years of medicines, food, parts for important machinery like the electrical grid, and fuel.
None of us do.
Anyway, the structure of Western dominance is now dismantled, by Westerners. Perhaps the Chinese could have industrialized fully without us, but it would have taken a lot longer and as long as we had our own industry and tech stack, it would have just meant a cold war situation with two blocs and, absent de-industrialization, perhaps the West could have held its own, though China is innately stronger than the USSR ever was, especially with Russia as an ally.
We did this to ourselves, or our elites did, because of sheer stupidity and arrogance. Don’t underestimate how bad this will be. I’m in the “better China as hegemon than America” crowd. I think they’ll kill a lot less people. But be clear, they are going to be a hegemon, at least in industrial terms and this is going to mean a serious standard of living drop in much of the West. Europe will get hit the hardest (especially Britain) but everyone’s going to get hit hard. A few of us may make the switch over to the hegemon on favorable terms. Canada and Australia have the best chance of doing this being large countries with tons of resources and relatively small populations, but it’s not a sure thing.
Dominance and prosperity are both structural. They are always created by competent leaders and populations and when their successors become complacent they are always lost.
That’s where we are.
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You may remember when Iraq said “Americans must remove all troops from Iraq” and the US said “who cares what you think?”
Well, right now the Iraq resistance is removing all American troops from Iraq. They can’t defend their bases and even had to beg for a truce to remove troops.
But the real problem isn’t American troops in Iraq, it’s financial:
The U.S. control over Iraq’s oil revenues primarily stems from the management of Iraq’s oil income through the Federal Reserve Bank of New York. After the 2003 invasion, the Coalition Provisional Authority (CPA), led by the U.S., established the Development Fund for Iraq (DFI), which was held at the New York Fed. The DFI was designed to collect Iraq’s oil revenues and use them for the country’s reconstruction and development. It was also set up to protect the Iraqi oil revenues from lawsuits and claims relating to Saddam Hussein’s rule. Then-president George W. Bush signed an executive order, which has been renewed by every president since, that set up the arrangement. The DFI eventually became an account of the Central Bank of Iraq at the New York Federal Reserve, which remains the case today.What leverage does this give the U.S. over Iraq?Oil is Iraq’s most important revenue source, accounting for some 90% of the state budget. This gives Washington significant sway over the country’s economic and political stability. When the Iraqi government asked U.S. troops to leave the country in 2020, Washington reportedly threatened to cut Iraq’s access to the New York Federal Reserve funds, with Baghdad ultimately backing down. While the Iraqi government has gained more control over its financial affairs since the early years of the U.S. occupation, the ongoing relationship highlights the enduring influence of the U.S. on Iraq’s economic landscape, even as the country seeks to assert its sovereignty and independence.
This is the time to end the arrangement. Go to China. Ask them for an account and for a credit equal to the amount now held in American hands. It’s hard to get an accurate figure, but it’s not that large, perhaps a hundred billion or so (that may seem like real money, it isn’t.)
Switch to selling oil in Yuan, the Chinese have a banking system which completely routes around SWIFT. Then just sell their oil to China and other countries who use the system: there’s more than enough demand, especially right now. Iran will let Iraqi oil out, especially under these circumstances. And who needs dollars any more? Anything Iraq needs it can buy from China in Yuan.
Now, Saddam’s revenge.
If you’re old enough you remember the first Gulf War. Iraq invaded Kuwait. Saddam had asked for permission from the US and the response was one Saddam believed was positive. And, after all, Saddam had fought an entire very destructive war against Iran for the US: he was an American proxy. Kuwait was created explicitly over a huge oil reserve as a way of keeping it from Iraq, which it really should be part of: it’s a colonial era legacy state.
Well, the US didn’t approve and the Iraqis got slaughtered, their power, sewage and water infrastructure was systematically destroyed, then Clinton subjected them to savage sanctions which killed million. Estimates of child casualties were over 500,000, based on population studies. Clinton’s secretary of state, Madeline Albright, when asked about this, infamously replied that the deaths were “worth it.”
Anyway, Kuwait’s military is a joke, it’s right next to Iraq and conquering it would be trivial, since there’s no easy way for the US to get troops there. So, switch to China and the Yuan, finish kicking the Americans out, and conquer Kuwait. (No one will cry, Kuwait’s rulers are absolute scum.)
This is a historic opportunity for Iraq, and they should take it.
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