Dear Naked Capitalism Reader,
Welcome to April 2023 and the Best of Naked Capitalism from the last month or so. This month we've got Bank Failures & Bailouts & the Fed, the Russia/Ukraine (and widening) War, China: Chips and Conflict, COVID, Biometric Surveillance, and Lawns. We hope you enjoy the collection!!
Major Stories
(3/2/2023) Ukraine, Russia, China, and Dealing With Crazy People. While it's been a while since yours truly has posted on the war in Ukraine and our determination to mix things up with China, we seem to be in an intermediate phase of sorts. Major country leaders in the West remain focused on the conflict. The Collective West is trying hard at the G20 to muscle more countries in line, after an embarrassing fail in a similar exercise with Global South invitees to the Munich Security Conference. Biden and then Janet Yellen went for Kiev photo ops with Zelensky. That Biden trip, which made the Administration neglect of the East Palestine toxic train blast more galling, gave Republicans, most of all Trump, an easy win.
But there are more signs of anxiety and erratic behavior by key players. While the structure of the system looks the same, more and more energy is being pumped into it. Either it will be released somehow, say by an aggressor de-escalating, or the pressure will keep rising until we have a state change. And state changes means the system becomes chaotic. The September 2008 financial crisis was an example.
While we won't dwell on China escalation today, the over-the-top, paranoid response to Commies under the bed peregrinating balloons looks like big-time displacement activity. We are in no position to whack China so we'll whip ourselves in a frenzy over something we can (eventually) destroy.
JR comments: This was a most excellent read, but of course it is a very, very sad read, too. It just seems like killing fields there, what a sorrowful loss of life.
My biggest concern on the escalation front will be when the Abram M1s are deployed. My understanding is that these tanks require a fair amount of maintenance. Based on the small bit of reading I have done, I expect that Ukraine will be unable to provide anything other than the simplest, most basic maintenance. Thus, in order to keep the M1s deployed at the front, US military service technicians may well be forward deployed in order to provide maintenance services for the M1s. So, once again, US service members are in harm's way. I don't want anyone to get hurt in this mess, least of all US service members. If US service members are forward deployed, I hope and pray they get through this safely. If, however, US service members are injured or killed, I am worried that will lead to even greater escalation. I guess the same line of reasoning applies to the deployment of other tanks from the West. Not happy thoughts here, I hope I am wrong.
(3/6/2023) America's Chips War With China: Another Sanctions Backfire Coming? The US is trying to hold its high ground of dominance of the semiconductor industry via export restrictions and subsidies to increased domestic manufacturing, notably via the Chips Act. Yet experts are quietly warning that this plan to decouple from China may backfire, particularly if pursued too aggressively.
Semiconductors are fundamental to the operation of commerce and consumer communications, so the US believes it has found a key choke point by which it can impede China's further rise as an economic superpower. But the wee problem with that view is that the US view thought it had an even more powerful choke point with Russia via its supposed dependence on dollar payment systems. We know how that movie is working out.
Admittedly, the US actions against China's chips industry are not of the 'kill the economy' ambitions of its sanctions against Russia. But there's a weird myopia in not understanding that China has plenty of ways of retaliating if things were to get ugly, given US dependence on China for many imports, starting with pharmaceutical ingredients and seemingly humble chemicals like ascorbic acid. And as we'll address soon, a broad analysis of technology leadership by an Australian think tank shows the China to be number 1 in 37 of 44 categories.
Stephen comments: China clearly has plenty of ways to hit the US / West too so unclear what the Biden administration really will achieve here, other than entering an escalator that ratchets up conflict from name calling to sanctions then more sanctions then provocations then worse name calling until we get to some form of armed conflict. The latter will likely be by proxy given US precedents and the general disliking of body bags flowing home. This is as opposed to limited concern if proxy nationals get killed. Sorry to be so macabre but it is hard to see how else this ends unless the collective west comes to its senses.
The various quoted articles on chips do not seem to mention Eindhoven based Dutch ASML, which was originally a Philips spin out, and who make the high tech machines for producing them. Am no expert on that full supply chain but my understanding is that a large part of the core lithography technology needed is controlled by them and then indirectly by Germany's Zeiss who make the optics needed in the machines. There are competitors such as Nikon mentioned above but the high end manufacture is still very much dependent on ASML, I believe. Some of the technology may have originally been US but clearly cooperation with the Netherlands and Germany seems crucial for any form of effective sanctions. Perhaps this is just a 'given'!
Ultimately, in the longer term sanctions will anyway spur China with over a billion people to invest in technologies that it might not have bothered with otherwise. Nice job, collective west. If I were ASML I might start to get more worried now that this highly successful carve out from Philips could eventually go the same way as the rest of the corporation did and lose its global leadership.
(3/8/2023) 'How Stupid Do They Think We Are?' Nord Stream Pipelines Bombing Edition. It's instructive to see how having a captured press, plus having well-seeded the public with fables about Ukraine derring-do, allows the Administration and its co-conspirators to run intelligence-insulting stories. A colleague who describes himself as possessing sang froid somewhere between that of a Chinese sage and a dead dog was irate over the latest howler, that of stories in the New York Times and German press, released in very close proximity to each other, presenting the Nord Stream pipelines bombings as the doings of a mysterious pro-Ukraine group.
What got my friend's dander up wasn't just the ridiculousness of the claim, but als the suspicious media footprints. The German and New York Times stories came out so close to each other, with the New York Times piece presenting itself as completely independently sourced, that they were clearly coordinated. As we'll explain, the German stories, with Die Zeit first out of the gate, relied on reports from German prosecutors. The New York Times piece did not mention German reports or German officials, but instead cited only US officials.
I'm told by German speakers that the summary in Politico is accurate. The 'Ukraine link' part is awfully slippery, since rental of a Ukrainian owned ship does not establish the owners were in on the plot.
David comments: From the beginning of this story, I've been struck by the total contrast between the professional efficiency of the operation itself, and the shambolic amateurism of the conception and political handling, which seems to have been done by a bunch of children. I literally cannot imagine what the originators of this stupid idea were thinking and expecting, and how they believed that the truth could be covered up indefinitely, or at least long enough that it didn't matter. This is Washington, after all, where everybody hates everybody else, and all dirty secrets come out eventually if only because somebody wants to leak them to discredit someone else. When I saw Hersh's story, my first thought was that his source was one of those individuals, or from one of those agencies, which argued against the plan and tried to stop it, and is now getting its revenge.
So this seems to be an attempt to throw a bone to the media, in a way that doesn't implicate the US and NATO, and doesn't directly implicate the government in Kiev. It's a minimalist solution but the important thing is that it suggests that Washington has lost control of the narrative, and is in damage limitation mode. And that in turn suggests that Biden and co are going to be forced back, step by step, by more revelations in the near future. Once you've lost control of the narrative in a situation like this it's very hard to get it back.
(3/11/2023) Silicon Valley Bank Fails, With Deposits of Many Venture-Backed Companies Frozen. How Bad Will the Fallout Be? Silicon Vally Bank, the 16th largest in the US, was shut down and put under the control of California Department of Financial Protection and Innovation on Friday. This failure is set to send ripples across smaller technology companies. Even though there is good reason to think that uninsured depositors will eventually be made whole or nearly whole, some may have had so much of their working funds tied up at Silicon Valley Bank that it may be hard for them to find work-arounds, particularly with so many other companies in the same pickle. While is it is likely someone will cobble together financing, at what speed and on what price?
One seldom-acknowledged issue with the American banking regime is that it is pretty much impossible for small to medium sized business to protect themselves from the risk of a bank failure. For operational reasons, they pretty much have to keep the money they will use for payroll at a single bank. Similarly, many companies have routine transactions that exceed the $250,000 deposit guarantee. ...
Reader Zephyrum explained that was no accident:
'When I had a VC-backed company more than a decade ago, we were required to put our $11M lump-sum funding into SVB where the VCs could keep an eye on it. They had levers into the bank. It bothered me at the time.'
The Rev Kev comments: Somehow it bothers me when Reader Zephyrum explained that when they had a VC-backed company more than a decade ago, that they were required to put the $11M lump-sum funding into SVB where the VCs could keep an eye on it. So instead of prudently having his banking with different banks, that they were forced to put all their eggs in one basket, like it or not.
Meanwhile, the ripples are getting larger. Circle's USDC, the second largest stablecoin with $43 billion market capitalization, held an undisclosed part of its $9.8 billion cash reserves at failed Silicon Valley Bank. …
It's not over yet.
(3/13/2023) US Officials Make Non-Bailout Bailout of Silicon Valley and Signature Bank and Continue Class Warfare. The great unwashed American public is being subjected to yet another round of 'Cream for me, crumbs for thee' in the form of a bailout of Silicon Valley Bank, Signature Bank, and the creation of a facility to shore up uninsured deposits at other wobbly institutions.
This tender concern for spillover effects in the economy comes a mere five days after Fed Chairman Jerome Powell told the Senate Banking Committee that the central bank was likely to change course at its next policy meeting on March 21 and 22 and go back to larger rate hikes, after moderating at its last meeting.
Elizabeth Warren called out that the Fed's own forecasts showed that it was setting out to destroy jobs. From Fortune:
'Sen. Elizabeth Warren, Democrat of Massachusetts, noted that Fed officials have projected that the unemployment rate will reach 4.6% by the end of this year, from 3.4% now. Historically, when the jobless rate has risen by at least 1 percentage point, a recession has followed, she noted.
'If you could speak directly to the 2 million hardworking people who have decent jobs today, who you're planning to get fired over the next year, what would you say to them?' Warren asked.'
But the prospect of oh so special, connected, and innovative Silicon Valley companies possibly going bust as a result of uninsured depositors was too unfair to let stand. By contrast, ordinary Americans losing their jobs is merely a statistic.
Mind you, the justification for the emergency measures was contagion risk and that was real. Personal contacts, as well as chatter on the Internet, indicated that plenty of individuals and businesses with more than $250,000 in deposits were planning on Monday to move some funds into another bank or withdraw deposits and buy safe securities. Both would stress and potentially create runs at other banks. The likely winners would be the biggest banks, such as JP Morgan and Citigroup.
ambrit comments: Good heavens. I shudder too since I foresee another try at cutting Social Security for 'budgetary stability' reasons. If the Politicos argue with straight faces that the bailouts must be 'paid for' with cuts elsewhere in the Federal Budget, expect all H — to break out.
People made fun of the Tea Party types carrying signs demanding that 'The Federal Government Keep It's Hands Off of My Social Security,' but that demonstrated that illogic can cut both ways.
Once the first small bank crisis is 'resolved' through a 'bail-in,' expect the GOP to make infinite hay out of it politically. With any luck, Trump and his cohort can restructure the Republican Party as 'The Party of the Working Man.' It might well be all smoke and mirrors, but then, politics as usual.
(3/20/2023) Fed, Central Banks Created the Current Crisis and Are on Course to Making Matters Worse. The incompetence of our financial regulators, most of all the Fed, is breathtaking. The great unwashed public and even wrongly-positioned members of the capitalist classes are suffering the consequences of Fed and other central banks being too fast out of the gate in unwinding years of asset-price goosing policies, namely QE and super low interest rates. The dislocations are proving to be worse than investors anticipated, apparently due to some banks having long-standing risk management and other weaknesses further stressed, and other banks that should have been able to navigate interest rate increases revealing themselves to be managed by monkeys.
What is happening now is the worst sort of policy meets supervisory failure, of not anticipating that the rapid rate increases would break some banks. Here we are, in less than two weeks, at close to the same level of bank failures as in the 2007-2008 financial crisis. ...
As we'll explain in due course, the regulators' habitual 'bailout now, think about what if anything to do about taxpayer/systemic protection later' is the worst imaginable response to this mess. For instance, US authorities have put in place what is very close to a full backstop of uninsured deposits (with ironically a first failer, First Republic, with its deviant muni-bond-heavy balance sheet falling between the cracks). But they are not willing to say that. So many uninsured depositors remained in freakout mode, not understanding how the facilities work. Yet the close-to-complete backstop of uninsured deposits amounted to another massive extension of the bank safety net.
cnchal comments: '. . . the only way for the Fed to get inflation down via interest rate increase would be to kill the economy stone cold dead. It appears to be reaching that end faster than anticipated by killing banks.
The banks being killed would be the Peasant's banks presumably or at least not the TBTF banks, and since we are being lied to all the time, the claim by the liars that bank consolidation, whereby the TBTF banks eat all the small ones is not the desired outcome, is a lie. The SVB failure was anticipated by the FED and precipitated by the billionaire deposit rug pull so it is the exception. Yellen clearly told the questioner from Oklahoma that if a small bank there failed the depositors with amounts greater than a quarter million would not be bailed out.
I find it to be too credulous that the FED is incompetent. We are being rug pulled by them as planned.
(3/22/2023) How the Current Refusal to Deal Harshly with Failing Banks and Their Executives Will Create an Even Bigger Crisis. Your humble blogger has been saying that the new bank rescue scheme, which is a covert backstop of nearly all uninsured deposits, is a disastrous extension of government support to institutions that are welfare queens save for executive and manager pay levels. And the Fed may make banks' 'Heads I win, tails you lose' bet even bigger by announcing that all deposits will be guaranteed.
We've argued since the crisis that banking is the most heavily government subsidized industry, far outstripping the military-surveillance complex in the support it gets from the great unwashed public. Yet every time banks predictably drive themselves off the cliff, they get even more goodies, with virtually nada in the way of new restrictions or punishment of miscreants. The US is keen to perp walk Donald Trump, but not bank executives.
griffen comments: We are a nation of laws, not men. John Adams
Yeah, historical statements such as the above, no longer supported in today's America and our modern economic times. I was not yet out of high school, but recall reading how after the S&L Crisis that many executives served actual time in jail. The early 2000s with the Enron and Worldcom debacles, chief among others, also saw those executives serve time in jail; Ken Lay did not serve time, excepting only for an untimely demise. Imagine that young kids, bad guys not getting bailed out after their bad decision and nefarious deeds were brought to light.
Heads they will win, tails you must lose. These crisis events can be broadly preventable it seems, but based on recent antics from Yellen, etc… by a few examples I am simply not encouraged.(2/27/2023) New, Buzzy Cochrane Study Sets the 'Fools Gold' Standard for Anti-Maskers. I didn't expect to have to drag out my yellow waders for a study from a prestigious brand like Cochrane, but here we are. What is a Cochrane study? A publication of the Cochrane Library, an important institutional player in the field of Evidence-Based Medicine (EBM), whose methods are, in the main, standardized and rigorously enforced,(For EBM, see KLG's comprehensive takedown here). Vox explains
Sadly, in the study we are about to consider — 'Physical interventions to interrupt or reduce the spread of respiratory viruses' (January 30, 2023), the selection of trials for the meta-analysis is dubious (all Randomized Controlled Trials, or RCTs), the epidemiology is bad, and various other Cochrane standards have not been met. (Hereinafter, I will call this study 'Conly's Cochrane Study' or 'Conly' after the corresponding author, who in my view is the driving force because of his institutional power. We will consider authorship criteria for Cochrane studies below.) While 'Conly' itself is cautious in its conclusions — especially if you know how to read Cochrane studies — the uses to which 'Conly' has been put by polemicists — uses which some of the authors, being polemicists themselves, must surely have known — are not at all cautious. Bret Stephens, opinionating in The New York Times, was a typical anti-mask voice: 'Opinion: The mask mandates did nothing. Will any lessons be learned?'
Samuel Conner comments: Thank you, Lambert. This is disheartening, but worth knowing.
It has been said that 'science advances one funeral at a time', but whoever coined that phrase had not observed the most recent history -- it may actually require millions of funerals. -- Are Prof. Conly's concerns about the implications of masking for acne rooted in RCTs or are they based on mechanistic considerations?
(3/27/2023) Is Our Health Care System Turning Hospitals into (Covid) Death Traps? Clearly, one goes to a hospital to be tested, or to be treated and hopefully cured; Caveat Patiens should not be part of the deal. However, for nosocomial infection (also known as Hospital-Acquired Infection, HAI, which at CDC stands for Hospital-Associated infection, neatly removing agency) Caveat Patiens does seem to be part of the deal, at least in the United States, which I find more than a little troubling.
In this post I'll take a quick look at HAI generally, and then HAI in relation to Covid. Both are troubling. I had hoped to go further, and lay hold of the institutional factors behind our health care system's failures to recognize aerosol transmission and support universal masking, but — sadly, like the New Yorker writer who entered the swamp on the trail of a thought-to-be-extinct bird, and never found the bird — I'm reduced to mere speculation, and I did try. (That I can't hold anybody in accountable for demonstrable failure is in itself an interesting data point; perhaps some kind readers will help out with pointers in links, or throw some hospital administrator's PowerPoint over the transom. Your anonymity is guaranteed. But perhaps all the real decisions are taken out on golf courses, where private equity goons chat among themselves!)
Democrita comments: Am back in the ER with my mom, who caught covid in this same hospital two weeks ago. Everyone on staff was wearing masks, but…off the nose, dangling off the ears, etc…and no enforcement with visitors.
As she was checking out they told her her roommate had tested positive, and to take a home test when she got home. She is 82. And here we are again…
(3/14/2023) Silicon Valley Bank Fallout Nudges World's Most Troubled Systemic Lender, Credit Suisse, Closer to Edge. As the ripples of contagion from the collapse of Silicon Valley Bank and Signature Bank spread out, one European bank is particularly vulnerable. And despite losing over 95% of its market value since 2008, it is still too big to fail.
The shares of Credit Suisse Group AG, the world's most troubled systemic lender, fell by as much as 15% on Monday (March 13) to another fresh record low, before recovering slightly in the latter hours of trading. They are down a further 4% so far today (12pm CET, March 14). This latest crisis of confidence in global banking has also fuelled a fresh surge in the cost of insuring CS's bonds against default. The five-year credit default swaps on CS' debt surged to a new record of 453 basis points on Monday. It was the widest move of 125 European high-grade companies tracked by Bloomberg.
The panic unleashed by the collapses of Silicon Valley Bank and Signature Bank has compounded concerns about Credit Suisse's ability to restructure its business, attract new client funds (to plug the gaping gap left behind by last year's historic exodus), revive its investment banking business, and navigate ongoing legal and regulatory challenges. Those concerns were further exacerbated by an admission from the lender on the delayed publication of its annual report on Tuesday that 'management did not design and maintain an effective risk assessment process to identify and analyze the risk of material misstatements in its financial statements.'
This comes on the heels of news last week that the Swiss lender had delayed the publication of its 2022 annual report after a 'late call' on Wednesday evening from the US Securities and Exchange Commission. That call was apparently 'in relation to certain open SEC comments about the technical assessment of previously disclosed revisions to the consolidated cash flow statements in the years ended December 31,2020 and 2019, as well as related controls.' None of this, of course, is confidence-inspiring.
timbers comments: Turns out my payroll is serviced at Silicon Valley Bank. Yesterday at our weekly company meeting, our CEO – who regularly starts off this weekly meeting explaining the financial progress of fundraising for this startup BIO company in Cambridge that is developing treatments to restore intestinal bacteria growth for patients with c difficile – explained the situation, noting our paychecks may be delayed one or two days, and expressed the view the problem is probably resolved.
My take is, the company should consider an eventual change of banks. The reported last minute bonuses being paid out just before being shut down and insider stock sales by the uppers, gives the impression of rats jumping off a sinking ship. And who wants rats running the bank you use?
Business/Finance
(3/17/2023) Were the Bank Bailouts the Result of Rising Wealth Concentration? This is a long-winded way of saying that herd behavior in bad lending and/or leveraged speculation produced enough in the way of actual or soon to be realized losses to damage a lot of banks. And banks are interconnected: if one bank gets in trouble, its depositors are the customers or employers of customers of other banks. If those linked customers of other banks have an unexpected hit to income, they could default on their debt payments, propagating damage across the system.
The crisis of the past week was not that. Three different banks with very different business strategies and asset mixes got in trouble at the same time. Some like Barney Frank, on the board of Signature Bank, argue that the common element was a regulatory crackdown on banks too cozy with the crypto industry. But that's not really the case with Silicon Valley Bank, which has been suffering for a while from declines in its deposits due to a falloff in new funding all across tech land, as well as more difficult business conditions leading to not much in the way of new customers and falling deposit balances at most existing customers.
What the three banks did have in common was a very high level of uninsured deposits which made them particularly vulnerable to runs and therefore should have led the banks' managements to be very mindful of asset-liability mismatches and liquidity. And they should have focused on fees rather than the balance sheet to achieve better than ho-hum profits.
The Rev Kev comments: Going to take a stab at this story. We all know how corporations optimize their production which concepts like just-in-time delivery. I may be wrong here but from what I have read, it sounds like that these banks had over-optimized their operations to squeeze out maximum profit – but at the expense of having no 'slack' in the system for any unforeseen eventualities. So when it came about that there was a form of bank run on Silicon Valley Bank, they simply did not have the planned reserves there to meet any such eventuality because they had never planned for this to happen. Same with Signature Bank too for that matter. So in spite of having scores of billions in assets behind them, they were actually very brittle structures.
(3/27/2023) Fed-Inflicted Bank Wobbles Persist as Investors Fret About Deutsche. It is remarkable to see the Fed determined to keep driving banks and investors into the ditch in the name of combatting an inflation it can't fix. Since when do banks get in trouble from losses on Treasuries?
The typical pattern is the central bank raises rates late in an economic cycle, and 'late in cycle' generally includes overly permissive lending. The economy weakens and loans (and bonds) start going bad. Some banks are heavily exposed to weak credits, and they start to have trouble with funding, via deposit flight and/or trouble rolling short-term funding. If enough banks start looking sick, lenders and counterparties start pulling back on a broad basis, afraid they don't know enough about who might keel over next to take any risks. That leads to a widespread inability to obtain funding, even by institutions that are pretty sound. Enter central banks opening up special facilities….and not making much in the way of demands, even after the immediate crisis has passed.
Instead, we have interest rate losses produced directly by the Fed pushing though interest rate increases fast and hard. One economist colleague deems the panic, and the Fed's refusal to back off much, as ridiculous.
JohnnyGL comments: I really hope we're not about to engage in a new round of letting incompetent managers of big financial institutions try to quietly gamble their way out of mark-to-market losses (driven by interest rates).
It's clear we still have an institutional framework that organized around creating and inflating asset price bubbles. After all, we're still clearing out the deadwood from crypto.
(3/13/2023) Bankruptcies Soar Across EU, As Companies Hit Wall At Fastest Rate Since Records Began in 2015. Legions of European companies are succumbing to the final straw of Europe's largely self-inflicted energy crisis.
Bankruptcy proceedings in the Canary Islands, Spain's heavily tourism-dependent island chain, soared a whopping 276% year over year in 2022, according to the latest data published by the General Council of the Judiciary (CGPJ) in its report, 'The Effects of the Economic Crisis on Judicial Bodies.' The archipelago also saw the highest rate of dismissal claims in Spain, with around 400 of every 100,000 inhabitants losing their jobs.
But this trend is not unique to the Canary Islands, nor indeed Spain. It is happening across large swathes of Europe's economies, as legions of businesses succumb to the final straw of Europe's largely self-inflicted energy crisis.
In the EU as a whole the number of bankruptcy declarations initiated by businesses increased substantially (26.8%) quarter-on-quarter in the fourth quarter of 2022, reaching the highest levels on record since Eurostat began collecting EU-wide bankruptcy data in 2015. The number of bankruptcy declarations increased during all four quarters of 2022.
Alex Cox comments: Not every business which closes declares bankruptcy. Some just shut up shop. So the actual figures may be worse.
Fantastic that Italy has this reddito di cittadinanza (guaranteed income)! How did they sneak that past the EU?
(3/27/2023) How Debt Dynamics Polarize Economic and Political Power. Throughout history, the way in which societies have coped with the dynamics of interest-bearing debt has been the major dynamic transforming the character of their government and its legal philosophy. Military duress enables creditors to insist that governments pledge collateral in the form of land and mineral rights, using debt pressure to privatize the public domain and force creation of monopoly privileges. England created monopolies for trade with India and other regions starting in 1600, followed by the Bank of England with its privilege of privatizing money issue in 1694. The South Sea Company was founded in 1711, emulating France's Mississippi Company. Both countries organized a debt-for-equity swap, exchanging shares in the great growth industry of the day – the Atlantic slave trade and plantation agriculture – for government bonds. Financial bubbles ever since have been organized by governments trying to free themselves from debt.
chuck roast comments: Many years ago I was sitting in a church in Siena marveling at all of the fine marble, wood and glass. For the worshipers of 500 years ago it must have been like spending a bit of time in heaven. It was both immoral and borderline illegal for non-Jews to collect interest on a debt, but this sin could be easily washed away by tithing to the clergy. It was in Siena that I realized that there must have been a church industrial complex extant all over Europe for centuries. Build a church, empower the clergy, employ the neighbors, and wash away your sins.
Continuing Themes
(3/7/2023) Wall Street Journal: 'US Is Not Yet Ready for Great Power Conflict' Yet Still Plots Against China. A vivid scene came in my first year Harvard MBA course, Business, Government and the International Economy, taught in my section by George C. Lodge, son of Henry Cabot Lodge, Jr. George Lodge said he still remembered the day in 1968 when he realized there were limits to US power, that we could not fight a war on poverty, send a man to the moon, and fight a ground war in Asia at the same time.
The lack of that insight still seems widespread inside the Beltway, with belief in American omnipotence renewed by the fall of the USSR and then the further decline of Russia in the 1990s. A story initially published with a page-wide banner headline, The US is Not Yet Ready for the Era of 'Great Power' Conflict With China and Russia, curiously omits that it is the US that has been fomenting these clashes. And even though the URL banner on the article proper reads, The US is Not Yet Ready for the Era of 'Great Power' Conflict with China and Russia, the piece treats Russia dismissively, in passing, and treats escalating with China as a perfectly reasonable thing to do, not just now. We'll turn to Russia in due course, particularly in light of Ukraine deciding Monday to try to break into the Bakhmut cauldron.
If you read the article carefully, you'll see the reverse, that any meaningful improvement in US preparedness against China is based on hopium, like the US developing, manufacturing, and deploying new weapons that are on the drawing board or in early stages. Similarly, it fails to admit a huge weakness in the US dealing with China: that our Navy is badly overinvested in the floating pork known as aircraft carriers. Informed observers like Scott Ritter have said China has the capability to take them out without too much difficulty if they get within menacing range. Sinking only one aircraft carrier would result in roughly 6000 deaths, a humiliation the US would not tolerate. Ritter has long worried that our response would be to fire a tactical nuke at the Chinese hinterlands. Ritter is certain that China would immediately light up the entire US West Coast.
John R Moffett comments: What I see is a constant and monumental effort at military job security with the double aims of stirring up trouble in various locals, only to claim that the resultant trouble shows the urgent need for increased military funding. It always reminds me of the stories of volunteer 'firemen' who get caught setting fires so they can show up to be the hero to help put the fire out, only on a much larger, more deadly scale.
(3/5/2023) The Widening War: How the Nato-Russia Confrontation Is Playing Out in North Africa. Western officials are now openly admitting the war against Russia (and China) is worldwide and composed of competing blocs.
The colonial mindset comparison is apt as the West seeks to take control over African and Latin American resources. While this is nothing new, as the statements coming from the West make clear, countries that are friendly with Moscow and/or Beijing should expect even more concerted efforts at infiltration, sanctions, and any other means to restrict ties with the Russia-China bloc.
While some smaller states could benefit from being wooed by both sides, many will likely suffer as increased subversion and proxy conflicts are likely to play out in those countries. Take the comments from US officials to Bloomberg on Feb. 24 that the US, in year two of the war, is going to double down its efforts to 'tighten the screws' on countries still keeping a foot in both camps.
This will be especially true in states that are resource rich – whether in oil, gas, or 'green' commodities. These battles are already underway across Africa and are likely to intensify. North African countries have thus far been unwilling to help 'isolate' Russia. The EU energy situation is still dire, which it is trying to remedy with a renewed push into Africa in search of oil and gas, as well as a race to control 'green' resources. China does not want to give ground in Africa, and Russia, while seeking to prevent any isolation, can also sooner bring Europe to its knees if it throws a wrench in the EU-Africa energy plans.
Indeed, it's hard to see how the West's demand that states pick a side wouldn't only isolate Europe further and exacerbate its energy woes, as I'll discuss here regarding North Africa.
Maxwell Johnston comments: Thank you for this summary of a live situation in an often-overlooked part of the world, really fascinating stuff. The map of Med pipelines is a saver; I'm familiar with the layout of European pipelines, but not with these southern ones. Good to know.
'Energy tech pioneer Octopus Energy Group, in partnership with Xlinks, last May contracted to build the world's largest subsea power cable to deliver renewable energy from Morocco to Devon in the southwest of the United Kingdom.' Wow. Speechless. Post-Nordstream, I'm amazed that anyone is even thinking of laying anything on any ocean floor (whether pipelines or cables), let alone insuring or re-insuring them. All such infrastructure is fair game now. Don't serious players realize this? Our world has changed forever.
Other Politics
(3/20/2023) Turkey's Opposition Leads in the Polls. Would They Move the Country Closer to the West? . In recent years, Türkiye under president Recep Tayyip Erdoğan has forged closer ties with Moscow, and has profited from being a middleman between Russia and the West that helps both sides bypass sanctions.
Following the Iran-Saudi Arabia rapprochement, it's clear which way events are moving in the region.
Turkiye's normalization talks with Syria continue. Moscow hosted diplomats from Ankara, Damascus, and Tehran last week in an effort to continue the thaw. Türkiye, as part of its turn east, has abandoned the US-led effort to topple Assad, and Russia began leading the detente efforts last year after more than a decade of hostility between Syria and Türkiye.
But Turkish general elections are on the horizon, currently scheduled for May 14. The key question is would the Erdogan opposition change Türkiye's current trajectory vis a vis east and west?
Savita comments: As we've just learnt, Erdogan/ his government, has conceded to Finlands request to join NATO. I'm unsure as to what inspired the reversal.
(3/28/2023) US Continues Its Abuse of the EU With Recent Inflation Reduction Act Agreement. It was all rainbows and unicorns during a recent meeting between US President Joe Biden and European Commission President Ursula von der Leyen as they announced that EU-extracted and processed minerals will be covered by the Inflation Reduction Act's (IRA) clean vehicle tax credits.
In recent months European officials have been complaining about the IRA and its $50 billion in tax credits to entice Americans to buy electric vehicles assembled in North America. To be eligible, a portion of the minerals that are used to make the batteries must come from countries that have free trade agreements with the US.
But the IRA doesn't define 'free trade agreement,' and it isn't defined elsewhere in US law, which means that the Treasury will decide what kind of trade agreements will be included. Comments from US Secretary of Treasury Janet Yellen signal that it will adopt a loose definition so that smaller non-comprehensive trade arrangements can count as 'free trade agreements.' This would allow the US to include allies like the EU, UK, and Japan.
timbers comments: Europe would benefit from a deep dive of introspection and ask herself 'What am I fighting for and hope to gain by trying to regime change Russia?' And please cut the shared values nonsense.
Because the best Europe can hope to get with regime changing Russia is a return to lower energy and commodity prices towards the level she had before she started this non sense. How is getting back what to choose to give up, a victory or worth fighting for? On top of that, the US is likely to take the lions share of looting Russia should they 'win'. Sure, some European oil companies and others will scoop up some of the benefits but I suspect the US will be king of the hill overall. Maybe cheap labor from a destitute Russian populace but there is lots of that already all over the planet.
Never thought I would see Europe act so contrary to her own interests especially Germany, but there it is right in front of us.
Science and Technology
(3/24/2023) The Pushback Against Biometric Surveillance and Control Systems Is Growing on Both Sides of the Atlantic. Everybody's favourite big tech giant, Amazon, is facing yet another class-action lawsuit, this time for allegedly deploying biometric recognition technologies to monitor Amazon Go customers in its New York City outlets without their knowledge. According to the lawsuit, Amazon violated a 2021 NYC law which mandates that all business establishments that track their customers' biometric information, including retail stores, must at least inform their customers that they are doing so. Amazon apparently didn't.
'The lawsuit was filed in the U.S. District Court for the Southern District of New York on behalf of Brooklyn resident Alfredo Rodriguez Perez and a proposed class of tens of thousands of Amazon Go customers,' says the privacy advocacy group Stop Surveillance Technology Oversight Project. 'The complaint claims that from January 2022 to March 13, 2023 Amazon failed to post any sign stating that Amazon Go stores collect biometric data, including for over a month after Mr. Perez told Amazon it violated New York City law by failing to do so.'
Carolinian comments: Isn't Amazon Go just another one of Bezos' stupid futuristic fantasies? Still waiting on that drone delivery. Supposedly his tourist rocket rides have halted after one of the rockets blew up in testing.
Meanwhile several of the Go stores in Seattle have reportedly closed after shoplifting losses.
Say what you will about Musk but he is taking astronauts to the space station and bringing them back via NASA style water landings. Bezos is a dilettante futurist who simply got there first with Amazon.
(3/1/2023) The Crisis in Scientific Publication: Peer Review, Authorship, Responsibility, and the Future of Science. What follows is both a description and personal lament at the state of my profession (2). While it is indeed true that I have always had stars in my eyes when it came to academic life, I was early and often reminded that scientists are simply people, some more straightforward than others, some more interested in their 'careers' than the quality of their work. But it is also true that at the beginning of my life in science, the idea of the disinterested scientist whose goal was to understand the natural world was very real (pre-Bayh-Dole Act of 1980). Not that this has disappeared, but institutional imperatives from the Dean's or Director's office to the Office of the Director of the National Science Foundation have made such research much more difficult.
Which brings me back to my beginnings when the world of scientific literature was truly something special. Stuart Macdonald has recently published a review in the journal Social Science Information with the title 'The gaming of citation and authorship in academic journals: a warning from medicine.' (3). This paper is regrettably behind a rather stout paywall that was surmounted by my institutional library, but I will do my best to describe it here. The primary argument is that 'peer review no longer maintains standards in academic publishing, but rather covers up the gaming of citation and authorship that undermines these standards.'
Elizabeth Petroske Ph.D comments: Thank you for this well written summary of how science has been corrupted over the last 50 years. I have a Ph.D from one of the top 10 public research universities and my first job in a research lab was in 1972. I had 3 different degrees (AS, BS, PhD) and three different resumes to use depending on the requirements of the job I was applying for. The only thing my Ph.D was good for was the occasional part time teaching positions, which I did mostly for the fun of seeing the the lights go on in the eyes of the few good students that were actually paying attention. Most of my paychecks for five decades came from state and federal government regulatory jobs, and they only wanted a BS degree.
Literary and Lifestyle
(3/26/2023) Please Keep Off the Grass!. No, not that kind! And consider yourselves lucky I didn't go with my first choice for a headline: Silence of the Lawns. Because I couldn't figure out what lawns would be talking about in the first place. Anyhow, since we are now officially five days into Spring, I thought I would take a quick, unserious, barefoot romp through American's favorite managed grass space: the lawn (which readers already know I hate ...)
When I was a teenager, I made money by mowing lawns in the neighborhood. The lawnmower was advanced in the sense that it had a grass-catcher, but otherwise hard metal body and hard rubber wheels, nothing safety-oriented at all. I'd fill it up with gasoline and oil if necessary, and drag it over to the customer's property. All I really had to know was not to put my hands or my bare feet near the blades, and clean the electrode of the sparkplug if the mower wouldn't start. That, and how to organize the cutting so I did the absolute minimum of work. (The key, I found, was to mentally organize the lawn into lanes, and never to turn the mower (which would have left unsightly curves to be handled with an extra cut). Instead, having pushed the mower to the end of one lane, I'd flip it into the next, and then drag the mower to the end of the next, repeating for the width of the lawn. (Naturally, I'd overlap the lanes, to avoid 'mohawks' of uncut grass, necessitating another round of cutting.) I go into the detail just because I enjoyed the physical labor in the hot sun so much (not to mention the oceanic sound of the mower).
Mangelwurtzel comments: Thanks, Lambert. Great post! I, too, grew up mowing lawns for pocket money (the worst ones were the fenced yards which were frequented by a family dog). It would be wonderful to see the lawn industry wither away to nothing, since it is barely more than an ecologically destructive make-work program, and be replaced by bountiful, overflowing, somewhat messily exuberant vegetable-flower-wildlife patches! I would say a small lawn might have a place, let's say not bigger than one could mow with a hand-pushed reel mower, if the annual rainfall is enough to support such an endeavor without irrigation. Vast lawns do give people a sense of purpose, though. My neighbor mows his every four or five days throughout the summer, even after it turns brown and crisp, burning who knows how much gas. He is just doing what he thinks he ought to. I treat my lawn more like a hay meadow and mow it every few weeks or longer, although it helps to have a scythe or a sickle bar mower for long grass. The hay goes straight on my garden or to the goats as 'fresh cut'. Luckily, I don't have persnickety neighbors or homeowners associations trying to enforce a mowing ordinance:
And Another Thing...
petal (3/4/2023) comments:
Thank you for the article about adoption(STAT). I've had so many people over the years cheerily tell me 'You can adopt!' and then I ask them 'Do you know how much adoption costs?' and get a blank stare. Then I explain to them. The only people I know that have adopted a (newborn) baby is my former C-suite now hedgefunder friend and his wife. Because they could afford it. I cynically joked with my mother and former partner about them having bought a baby.
My cousin(she cannot have her own children due to health reasons) fostered a 2 year old for 3 or 4 years, then the state suddenly gave her back to her screw-up mother. My cousin had been wanting to adopt the kid. Fast forward many months and a full-on hardcore police raid later(due to crack house, prostitution, and god knows what else), kid ends up back with my cousin one random night and she is finally able to go through with the adoption. Kid has been receiving regular counseling for years. The road to adopting a foster kid was a total nightmare.
My father's mother was adopted and never had any details. It took place 110 years ago. Just this past December I was finally able to get her original birth information(you get a sheet with the info as they do not send you a copied certificate) from the county through a strange twist of fate. NYS records were sealed for eternity up until a couple years ago. Neither she nor my father or his siblings ever knew about her origin other than she came from Buffalo(only partly true, come to find out). I sent it to my one remaining aunt for Christmas and she was blown away-speechless, and this woman is never speechless. She said 'Now I finally know where I come from.' Hedgefunder friend and wife are fully open with their adopted son about his adoption and origin.
Amfortas the hippie (3/26/2023) comments:
i'm in the middle of a giant infrastructure frenzy, at the moment…cabin, extension to the wilderness bar, and finally covering the giant greenhouse frame over there, so i can have gobs of tomatoes in january.
so, since i also now have a tractor, with a front end loader and a rototiller(all of this due to Wife's surprise life insurance largess…otherwise this all would have taken a decade)….my mind has moved on to the next phase…which is landscaping.
there will be no 'Lawns'.
only meadows…and edible forests, as much as i can manage.
geese, historically, do almost all of my mowing(even when we lived in town,lol…free eggs and veggies mollified the neighbors to the goosenoise)
but i keep a couple of DR Trimmers…one with a beaver blade…for the wild maximillian sunflowers and other woody weeds/shrubs that nobody likes to eat.
eventually, when infrastructure is done, and i can settle….at long frelling last!…into a groove, i'll hit the seedlings of such undesirables with the little tiller right about now.
my place, ideally, will consist of large raised beds(a whole acre is planned)…each fenced with 8' chicken wire…with grass and flower filled lanes(eg:Hobbiton) for the Falcon(golf cart).
And there it is - April at Naked Capitalism. Thank you very much for your time and attention and we'll see you again next month.
The Crew at Naked Capitalism
|
No comments:
Post a Comment