Ian Welsh

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

Author: Ian Welsh Page 65 of 436

America Flails, Resorting To Ineffective Sanctions Over and Over

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On May 3, 2024

17 Comments

This has been a theme, but let’s keep nailing it shut.

My favorite recent news was this beauty:

Russia would struggle to sustain its assault on Ukraine without China’s support, Blinken said. “If China does not address this problem, we will,” he added, in a possible reference to sanctions against Chinese businesses involved in the trade with Russia.

China wants Russia to win, or at least not lose the war and needs Russia as a secure ally so that it can’t be encircled or blockaded. Russia has the food, minerals and fuel that China needs, and naval power can’t embargo supplies.

As for the effect of sanctions, well, what’s the line? “Don’t threaten me with a good time?” The effect of sanctions on China has been to make China stronger in almost every way.

Back in 2015 Xi decided on a ten year plan “made in China 2025.” The US hated it and sanctioned large chunks.

The results?

the analysis confirms that more than 86 per cent of these goals have been achieved, with some others likely to be completed later this year or next. Meanwhile some of the targets, such as electric vehicles (EV) and renewable energy production, have been well surpassed.

We all know that the Huawei and anti-chip sanctions have backfired completely. China now owns the legacy chip market and is making rapid progress in advanced chips. It created its own OS, bypassing Google, and has put out phones as advanced as those made by US and South Korean companies. The iPhone market share in China, one of its most important markets, is cratering.

Chinese EVs are crushing: they cost far less than Western ones (though when sold in Europe, they are marked up hundreds of percent) and the car market in China is now dominated by Chinese vehicles, where in 2015 foreign autos were preferred.

As for Blinken’s threats, the Chinese ignored them, and the US did, indeed, sanction.

Boo hoo.

Meanwhile, China has been selling Treasuries at a record clip.

China has decreased its Treasuries holdings from $849 billion to $775 billion between the beginning of Q2 2023 and Q2 2024, reaching its lowest holdings since 2009.

Can you say “reduction of exposure?” Sure you can.

At the same time, a number of African countries have removed their gold stockpiles from America. It seems that stealing Russia’s reserves for geopolitical reasons has consequences.

The largest economies in Africa and the Middle East are withdrawing their gold reserves from the United States.
Starting in 2024, Egypt, South Africa, Nigeria, Ghana, Cameroon, Senegal, Algeria and Saudi Arabia have decided to withdraw their gold reserves from the United States.
It should be noted that South Africa, Egypt and Nigeria are the largest economies in Africa.

Huh.

Let’s circle back to the “sanction China for trading with Russia” imbroglio. Russian foreign minister Lavrov had something to say about that:

“Russian-Chinese trade and economic cooperation are actively developing, despite the persistent attempts of the states of the collective West to put a spoke in the wheels,” Lavrov said. “There has been an almost complete de-dollarization of bilateral economic relations. Today, more than 90% of mutual payments have been transferred to national currency,” he added.

“Interaction in the energy sector is steadily advancing. The supply of our agricultural products to the Chinese market is growing. Joint projects are being implemented in the investment and industrial areas. The mutual benefit from such cooperation is clearly felt on both sides of the Russian-Chinese border,” Lavrov concluded.

Are sanctions working outside of China/Russia? Not in the near region. Lavrov again:

Despite the threats that our partners have received from the US and the European Union not to cooperate with the Russian Federation and the Republic of Belarus under pain of so-called secondary sanctions and other penalties, trade flows across the CIS are growing. [Trade] edged up by more than six percent last year, amounting to over $100 billion.”

Now let’s talk more generally. Every sanction is an imposition of geopolitical risk. Everyone in the world understand this: cross the US or Europe, in any way, and they will sanction you. If you use the US/European financial system, these sanctions can hurt. The way out is to move away from that system—to create another one, where transfers never touch the US or Europe.

So every sanction increase the incentives to create that system and move to it. Parts are already created, more will be and in the end there will be two major financial networks: one Western, one for the rest of the world. The effect on Western prosperity will be significant, though there will be advantages to Westerners not in the elite, as it will crush rent extraction by financial elites. (Though no doubt they’ll simple double down on domestic rent extraction.)

We are living thru the end of the Euro-American era. The end of centuries of dominance. It’s fascinating, but the consequences will be vast. Understand that it’s happening.

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The Retard Parade of Western Politics Exemplified By Trump and Biden

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On May 1, 2024

27 Comments

We had a joke back in the Bush Jr. administration.

“Evil or stupid? Why not both?”

Bush Jr. was clearly mentally challenged. Cheney was supposedly smart, but he was the type of smart guy who winds up ordering the charge of the Light Brigade: great at internal politics, worthless at anything else.

Biden’s clearly senile (no, don’t even). Trump’s somewhat better, but still makes mistakes frequently and is often incoherent.. We used to sneer at the Soviet politburo of the 70s and 80s, but this worse.

But it’s not just about age. Macron is relatively young and a complete cockup, residing over a France which is constantly rioting. He’s gotten France kicked out of multiple African ex-colonies and proposes idiocy like sending the French Army to Ukraine. The German leadership are spinless morons who are shedding German industry because they won’t stand up to America, losing an advantage created by better men and women over a hundred years ago.

American policy forced Russia, which wanted to be part of the West, into a solid alliance with China, making China’s rise inevitable. The West deliberately sent China our industrial base, thus destroying the basis of our power.

We’re so incapable now that we cant even keep Yemen from shutting down shipping in one of the most important straits in the world. Drone tech should NEVER have been developed by the US military, because it was obviously a tech like gunpowder or the crossbow: it empowers any idiot to defeat extremely expensive military units and that’s what the US has an advantage in. It doesn’t have anything else: its soldiers are not, and never have been very good, just well equipped and numerous.

And then there’s climate change. “There’s a threat we know will probably end our civilization, but fuck it, let’s make it worse!”

This is true late Roman Emperor level dysfunction. Absolute morons getting everything wrong, capable of nothing but alternating between pandering to elites and making cruel shows of ineffective force, while the fall everyone with sense knows is coming storms forward from the horizon.

Of course, they do live in a world where they fuck underage girls and boys, grow bloated on bribes and pat each other on the back telling themselves that they are the greatest great leading the most powerful power that every strode the world. Trump shits into a golden toilet.

But this Emperor’s New Clothes crap. They’re idiots. They’re evil. And they’re presiding over the end of the European era and the induction of catastrophic climate change and ecological collapse while getting their asses repeatedly kicked by a bunch of tribesmen.

Pathetic.

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How To Deal With Student Protest Camps (FDR Edition)

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On April 30, 2024

21 Comments

Students in America and increasingly across the world are demonstrating against the Gaza genocide. They’re right to do so, opposing a genocide is never the wrong thing to do.

The reaction of campus and civil authorities has been predictable. Send in the cops, who violently disperse the camps, similar to how they have decided homeless people aren’t allowed to live anywhere. This video, of a professor who is the wife of the Dean of admissions (and who was not part of the protest) makes the point.

Police, of course, are police because they like hurting people, with vanishingly few exceptions. Any excuse is enough of an excuse for most of them. The Professor found out how much her “privilege” really matters.

What’s interesting about all of this is how stupid it is. Attacking the protestors is, as those of us who’ve been around for many protest cycles know, not going to stop them. It’s the beginning of the cycle of protest, not the end, and it drives news. In some ways it’s a victory for the protestors’ cause.

In 1932 a large group of Great War veterans went to Washington D.C and set up a camp. They wanted their bonuses for WWI paid early, because it was the Great Depression and they needed them. Hoover, still President, sent in the Army, lead by Douglas MacArthur (and opposed by Eisenhower) and burn the camp. FDR, who actually opposed paying the bonus because he felt it helped one group without helping all, said that the scenes of brutality had just elected him.

Burning Down The Bonus Army

The Bonus Army didn’t give up, and when Roosevelt took power, he took a very different tack: he sent his main political advisor, Louis Howe, and his wife. Instead of attacking the encampment, they arranged for them to have three meals a day and a clean encampment, and FDR arranged for younger veterans to receive jobs with the Civilian Conservation Corp.

Four years later, over FDR’s veto, Congress gave the Bonus army their bonus.

The point here is that FDR essentially de-fanged people he opposed by treating them kindly. Violence produces opposition and even if it “works” it makes people hate you and harden their positions.

The protestors are right about Gaza, of course, and right that the US shouldn’t be helping commit a genocide. But even if you oppose them, the correct thing to do is to treat them kindly unless they truly become violent or massively disruptive (and even then, give them rope.)

The response of university administrators is clearly emotionally driven: they believe in Israel’s genocide and want it to continue and are offended and ashamed by students who point out the evil of what they are doing. If they weren’t emotionally compromised by their commitment to genocide, they’d be a lot more sensible, even if they disagree with the protestors.

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Open Thread

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On April 27, 2024

25 Comments

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Canadian Housing Market Craziness

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On April 25, 2024

34 Comments

So, the CBC is the the national broadcaster in Canada, similar to the BBC in Europe. They’re pretty stodgy, they run good radio programs and they are wary of the government, as you’d expect.

They just wrote a really good article in problems in the housing market.

The two graphs that really matter are:

But here’s what I find interesting. Quotes like this:

“What started happening in B.C. and spread throughout the country is that we weren’t just satisfied with paying off our mortgage to build equity. We’re like: ‘You know what? I want this home price to double, triple, quadruple.'”

When existing homeowners want prices to rise faster than earnings in the local economy “is the moment you want a wealth windfall for those who are owners now that will come, by definition mathematically, at the expense of affordability for those who follow,” Kershaw said.

“That’s the trouble we’ve gotten ourselves into. And if we cannot have that conversation, we will never solve the crisis of housing affordability.”

If housing is an investment; a way to get rich, then by definition it’s going to get expensive faster than most people’s income. This is common sense. It’s acknowledged in Japan, for example, but in North America we’re addicted to our free riches, and since most people are locked out of the other sources of unearned wealth, real-estate prices are politically off-limits, they’re supposed to go up faster than inflation and wages forever, and the government colludes to make it happen, including by guaranteeing mortgages and stepping in 2008 to limit the price crash.

Homeowners and home investors, after all, vote and donate to political parties.

Anyway, CBC is stodgy and politically wary, for it to allow an article saying that home owners aren’t saints and perhaps housing prices shouldn’t be allowed to float into the stratosphere is very interesting.

The technical solutions to fixing rent and housing prices are well known: if Japan, with way less land, fewer resources and far more people can keep housing affordable, obviously Canada can do it.

But we can’t do it political parties want housing prices to keep rising and rising because it make an important chunk of voters happy.

And lack of housing (aka. homelessness) and increased food prices are going to lead to political unrest if something isn’t done.

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French Troops Have Been Forced To Withdraw From Three African Sahel Countries In the Last Two Years

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On April 24, 2024

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France has been forced to withdraw its troops from Mali, Niger and Burkina Faso. All three countries have forged closer ties with Moscow.

Every since de-colonization France has been the primary power in these countries. When France left most of its colonies it charged them for what it had built during colonial times and has made them pay those debts back. With interest, the debts are still being paid.

Beautiful that, “we conquered you and occupied you and you’re going to pay for that.” France also had a great deal of trade with its former colonial subjects. But that hasn’t been going so well lately.

I’m a bit of a broken record on this, but almost anything you can buy from the West, you can now buy from China. If you’re an African country who needs hydrocarbons or wheat, military equipment or mercenaries, well, Russia is happy to supply those.

And African countries are huge resource exporters, as a rule. China’s deals for resources are better, too. Want a railroad, hospitals, ports, even an entire city? They’ll build it for you, faster and for less than the West, and if you want to borrow money to pay for it, their rates are lower.

Same thing with internet. Want to buy cell phones or computers? China’s are cheaper and essentially as good. Want a telecom network? China’s prices are cheaper and the build faster.

The West doesn’t have a good reputation in Africa. We conquered them, colonized them, and post colonization we have treated them like garbage and with serious disrespect, as if they’re morons, not a region suffering from what we did to them.

On an individual level there’s a fair bit of Chinese racism against Africans, but not at the diplomatic level. Russia and China have a fairly simple policy towards African countries: their internal affairs are their business.

The best quote is from a Kenyan official, “Every time China visits we get a hospital, every time Britain visits we get a lecture.”

This goes back to what I’ve been saying about Europe, they think their shit doesn’t smell. They believe they are the peak of civilization, with the best government and organization and that they have the right to tell everyone else what to do, because obviously, they’re right, not the inheritors of five hundred years of colonization and looting, currently protected by America as satrapies, occupied after WWII, but no longer even (when lumped all together) in the top four creators of new scientific advances. (Those are China, America, Japan and South Korea.)

This delusional view of their virtues and everyone else’s flaws doesn’t go over well, but Africa and everyone else didn’t have any choice but to put up with it: after the USSR fell and until recently, the West and its conquered subjects (Japan, South Korea and Taiwan) were the only game in town. If you wanted anything remotely advanced, you had to buy it from the West and if you didn’t play by the West’s rules, they would coup you or punish you in various ways you couldn’t resist.

Those times are ending. America can’t even coerce or bribe a country as fundamentally weak and poor as Yemen.

So the Africans are turning to China and Russia, who treat them with a great deal more respect and give them far better terms.

France’s evening glory is ending. Soon they’ll be out everywhere or almost everywhere. The same is true of Europe as a whole. And even the US is being kicked out (most recently out of Niger.)

And Europe will return to it’s normal state: a backwards and largely unimportant peninsula on the periphery of Asia.

Oh, and those colonial debts for being conquered and ruled: about the time the Western financial system becomes one of only two financial systems, the ex-colonies will just stop paying.

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EU Delusion on Sanctions and Europe’s Future

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On April 22, 2024

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While the EU was considering more sanctions against Iran because it attacked Israel in retaliation for Israel bombing its embassy, Russia is sending Iran:

Meanwhile America is threatening China that if they don’t stop sending Russia “dual use” goods, the US will slap on more sanctions.

Boo hoo.

Let us remember the results of chip sanctions. China now owns the legacy part of the industry, and is making progress western “experts” said would take decades in years. Huawei has recovered from the sanctions and created its own OS. It is now a massive electric vehicle manufacturer in addition to everything else. BYD will soon become the largest EV manufacturer in the world, eclipsing Tesla. Something about its cars being cheaper, and Tesla gave up on building a cheap version of their cars. Maybe Tesla will survive because the US keeps all Chinese EVs out, but my guess is that if Musk stays CEO, Tesla’s best possible future is as a luxury EV manufacturer. Their “Cyber Truck” is a disaster.

Iran has built a formidable military with hypersonic missiles while under sanctions, sanctions which started at the same time the Islamic Republic was created. But now, what I’m sure happens, is that China sells Russia goods and Russia trans-ships them to Iran. That hasn’t undone the sanctions completely, but as the world moves away from using the dollar as the medium of trade and routes around US, EU and anglosphere banks, the effects of the sanctions will continue to diminish.

There’s very little that Iran needs (though still some) that China and Russia don’t make. And anything sold to Russia by, say, India, can also make its way to Iran. Cutting Russia off almost entirely gives it no reason to play by Western rules, and it doesn’t.

This is especially true now that America has taken Russian reserves and will be giving them to Ukraine. Anyone who trusts the US with their money who isn’t a complete ally, or satrapy, is a fool. There’s a reason why money used to be frozen before, but not actually taken. There’s a big difference between the two.

But let’s move back to Europe. This article from FT is to the point, German gas prices are two-thirds higher, structurally, than they were before the Ukraine war.

That’s after prices dropped massively. The simple fact is that US natural gas costs a lot more. Russia was selling Europe and Germany oil and gas for bargain prices. Russia’s still willing to sell, but Europe has its head up its ass.

The recent history of European industry is simple. When the Euro came into effect, it raised everyone’s prices except Germany’s, pretty much. Industry in all of Europe except Germany was badly damaged (this was especially bad in Italy which was more of an industrial power than most realized.) Germany, in effect, received a subsidy: the Euro was worth less than the German Mark.

Germany has (had) a lot of heavy industry: a lot of energy intensive industry. To get energy for this, Germany got cheap, below market Russia oil and natural gas. Russia got bulk sales of one of the few things it had to sell and Germany kept its industry competitive.

Those days are over, essentially permanently.

And the problem is that Germany’s dominance was in legacy heavy industry and automobiles. They aren’t creating a lot of new tech and science. They don’t have large new industries developing. They don’t have scale costs like China does. They relied on being very efficient and already dominating industries.

But those industries are leaving. A lot of them are going to America, the actual company facilities, but the production is, effectively, also moving to China and other countries.

I know I’m a bit of a stuck record on this (do youngs understand that simile?) but Europe is walking into its decline with its leaders acting as if it’s no big deal, indeed as if they are, to use my father’s crude insult still “King shit of turd island.” Sanctioning Iran, lecturing Africans and acting as if they are superior in every way: the only truly civilized people in the world.

Even as they do, the foundations of their prosperity, their “garden” are eroding out from under them at the speed of soil blowing away during the Dust Bowl.

They’re insane. Completely detached from reality, and some of the stupidest elites in the world, even exceeding America’s very high bar.

The Sun always sets. European leaders seem determined to make it set as soon as possible.

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Open Thread

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On April 20, 2024

9 Comments

Use to discuss topics unrelated to recent posts.

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