The US is waging a war on Russian energy supplies to Europe, and it may not be as futile as many people believe. From Andrew Koryobko at oneworld.press:
The US is ruthlessly waging an intense Hybrid War on Russian energy interests in Europe by targeting the Eurasian Great Power’s relevant projects in Germany, Belarus, and Bulgaria, banking on the fact that even the partial success of this strategy would greatly advance the scenario of an externally provoked “decoupling” between Moscow and Washington’s transatlantic allies.
The Newest Front In The New Cold War
The New Cold War is heating up in Europe after the US intensified its Hybrid War on Russian interests there over the past two months. This proxy conflict is being simultaneously waged in Germany, Belarus, and Bulgaria, all three of which are key transit states for Russian energy exports to the continent, which enable it to maintain at least some influence there even during the worst of times. The US, however, wants to greatly advance the scenario of an externally provoked “decoupling” between Moscow and Washington’s transatlantic allies which would allow America to reassert its unipolar hegemony there even if this campaign is only partially successful. This article aims to explore the broad contours of the US’ contemporary Hybrid War strategy on Russian energy in Europe, pointing out how recent events in those three previously mentioned transit states are all part of this larger plan.
From north to south, the first and largest of these targets is Germany, which is nowadays treating Russian anti-corruption blogger Navalny. The author accurately predicted in late August that “intense pressure might be put upon the authorities by domestic politicians and their American patrons to politicize the final leg of Nord Stream II’s construction by potentially delaying it as ‘punishment to Putin’”, which is exactly what’s happening after Berlin signaled that it might rethink its commitment to this energy project. America isn’t all to blame, however, since Germany ultimately takes responsibility for its provocative statements to this effect. Dmitri Trenin, Director of the Carnegie Moscow Center, published a thought-provoking piece titled “Russian-German Relations: Back To The Future” about how bilateral relations will drastically change in the aftermath of this incident. It’s concise and well worth the read for those who are interested in this topic.
If a country is clearly bent on depreciating its own currency, why hold either the currency or assets denominated in that currency. From Alasdair Macleod at goldmoney.com:
In the wake of the Fed’s promise of 23 March to print money without limit in order to rescue the covid-stricken US economy, China changed its policy of importing industrial materials to a more aggressive stance. In examining the rationale behind this move, this article concludes that while there are sound geopolitical reasons behind it the monetary effect will be to drive down the dollar’s purchasing power, and that this is already happening. More recently, a veiled threat has emerged that China could dump all her US Treasury and agency bonds if the relationship with America deteriorates further. This appears to be a cover for China to reduce her dollar exposure more aggressively. The consequences are a primal threat to the Fed’s policy of escalating monetary policy while maintaining the dollar’s status in the foreign exchanges.
On 3 September, China’s state-owned Global Times, which acts as the government’s mouthpiece, ran a front-page article warning that
“China will gradually decrease its holdings of US debt to about $800billion under normal circumstances. But of course, China might sell all of its US bonds in an extreme case, like a military conflict,” Xi Junyang, a professor at the Shanghai University of Finance and Economics told the Global Times on Thursday”[i].
Do not be misled by the attribution to a seemingly independent Chinese professor: it would not have been the frontpage article unless it was sanctioned by the Chinese government. While China has already taken the top off its US Treasury holdings, the announcement (for that is what it amounts to) that China is prepared to escalate the financial war against America is very serious. The message should be clear: China is prepared to collapse the US Treasury market. In the past, apologists for the US Government have said that China has no one to buy its entire holding. The most recent suggestion is that China’s Treasury holdings will be put in trust for covid victims — a suggestion if enacted would undermine foreign trust in the dollar and could bring its reserve role to a swift conclusion.[ii] For the moment these are peacetime musings. At a time of financial war, if China put her entire holding on the market Treasury yields would be driven up dramatically, unless someone like the Fed steps in to buy the lot.
If that happened China would then have almost a trillion dollars to sell, driving the dollar down against whatever the Chinese buy. And don’t think for a moment that if China was to dump its holding of US Treasuries other foreign holders would stand idly by. This action would probably end the dollar’s role as the world’s reserve currency with serious consequences for the US and global economies.
There is another possibility: China intends to sell all her US Treasuries anyway and is making American monetary policy her cover for doing so. It is this possibility we will now explore.
Posted in banking, Business, Currencies, Debt, Financial markets, Foreign Policy, Geopolitics, Governments, History, Trade
Tagged China, Federal Reserve, Gold, Inflation, Trade War, US dollar
There are two ways to break up a relationship: walk away, or get the other party to walk away. Is Trump trying to break up NATO by getting the other parties to walk away? From Patrick Armstrong at strategic-culture.org:
In January 2018 I advanced the hypothesis that U.S. President Trump understood that the only way to “Make American Great Again” was to disentangle it from the imperial mission that had it stuck in perpetual wars. I suggested that the cutting of this “Gordian Knot of entanglements” was difficult, even impossible, to accomplish from his end and that he understood that the cutting could only come from the other side. I followed up with another look the next March. I now look at my hypothesis as Trump’s first term comes to an end.
While we are no closer to knowing whether this is indeed Trump’s strategy or an unintended consequence of his behaviour, it is clear that the “Gordian knot of U.S. imperial entanglements” is under great strain.
German-American relations provide an observation point. There are four demands the Trump Administration makes of its allies – Huawei, Iran, Nord Stream 2 and defence spending – and all four converge on Germany. Germany is one of the most important American allies; it is probably the second-most important NATO member; it is the economic engine of the European Union. Should it truly defy Washington on these issues, there would be fundamental damage to the U.S. imperium. (And, if George Friedman is correct in stating that preventing a Germany-Russia coalition is the “primordial interest” of the USA, the damage could be greater still.) And yet that is what we are looking at: on several issues Berlin is defying Washington.
The US government, by trying to stop the evolution of a more multipolar world order, may actually be hastening that evolution. From
Foreign policy seems to have been placed on the back burner in the Trump era. Domestic issues, generic outrage politics, and the present covid-19 pandemic have sucked the oxygen out of American political discourse.
The fact that the media opts to cover more sensationalist material does not make foreign policy a trivial matter. If anything, the lack of foreign policy coverage reveals the dilapidated state of contemporary political debate. When the Fourth Estate does bother to broach foreign policy it does so for the most hysterical reasons.
The ongoing Russian hysteria is the embodiment of the media’s infantile coverage of foreign policy. Although the Cold War has been over for decades, pundits on both the left and right remain convinced that Russia—a country of nearly 145 million and with an economic output smaller than Canada’s—is hell-bent on reenacting its past Cold War aspirations.
Iran has always been on neoconservatives’ minds as well. Suffering from the trauma of the 1979 Iranian hostage crisis, neoconservatives and their establishment liberal counterparts have spent decades slapping on sanctions and trying to push for regime change in Iran. Earlier this year, the neoconservative bloodthirst was partially quenched after the US government assassinated Major General Qasem Soleimani at the Baghdad Airport. In a surprising display of restraint, the Trump administration has not escalated any further in Iran and potentially thrust America into another disastrous intervention. Had Marco Rubio or Jeb Bush been at the helm, God knows where the US would find itself.
This article is from 1993 and makes a strong case that secession and smaller political units are freer and more compatible with trade, production, and capitalism. From Hans-Hermann Hoppe at lewrockwell.com:
[Published in Chronicles, Nov. 1993, p. 23–25]
With the collapse of communism all across Eastern Europe, secessionist movements are mushrooming. There are now more than a dozen independent states on the territory of the former Soviet Union, and many of its more than 100 different ethnic, religious, and linguistic groups are striving to gain independence. Yugoslavia has dissolved into various national components. Slovenia, Croatia, Serbia, and Bosnia now exist as independent states. The Czechs and the Slovaks have split and formed independent countries. There are Germans in Poland, Hungarians in Slovakia, Hungarians, Macedonians, and Albanians in Serbia, Germans and Hungarians in Romania, and Turks and Macedonians in Bulgaria who all desire independence. The events of Eastern Europe have also given new strength to secessionist movements in Western Europe: to the Scots and Irish in Great Britain, the Basques and Catalonians in Spain, the Flemish in Belgium, and the South Tyrolians and the Lega Nord in Italy.
From a global perspective, however, mankind has moved closer than ever before to the establishment of a world government. Even before the dissolution of the Soviet Union, the United States had attained hegemonical status over Western Europe (most notably over West Germany) and the Pacific rim countries (most notably over Japan)—as indicated by the presence of American troops and military bases, by the NATO and SEATO pacts, by the role of the American dollar as the ultimate international reserve currency and of the U.S. Federal Reserve System as the “lender” or “liquidity provider” of last resort for the entire Western banking system, and by institutions such as the International Monetary Fund (IMF) and the World Bank. Moreover, under American hegemony the political integration of Western Europe has steadily advanced. With the establishment of a European Central Bank and a European Currency Unit (ECU), the European Community will be complete before the turn of the century. In the absence of the Soviet Empire and its military threat, the United States has emerged as the world’s sole and undisputed military superpower.
Are Chinese companies threats to US national security or to US high-tech companies? From Larry Romanoff at unz.com:
First, let’s dispel the combined notion that China spies on everyone and the US spies on no one. There is so much public evidence to destroy both these assertions that I won’t bother repeating them here. I will however remind readers that a few years ago China more or less banned Windows 8 from the country because it was discovered that the O/S had a built-in NSA back door. It seems that Germany reported on this first, but the devastating proof was at an IT conference where a Microsoft executive was interrupted during a speech with precisely this accusation. He did not deny it because the person making the accusation was the person who discovered it and had with him the proof, but refused to discuss it and changed the subject.
But this is hardly news. Forty years ago it was proven that all Xerox copy machines delivered to foreign embassies and consulates in the US were “espionage-ready”. Also, for at least 20 years, and perhaps much more, it was common knowledge that when any foreign embassies, consulates, banks and other corporations ordered computers and similar hardware from US suppliers, those shipments were intercepted by UPS, delivered to the CIA and/or NSA for installation of “extra” hardware and software before delivery to their destinations. This was one of the confirmations by Edward Snowden. Any search on this will give you millions of hits unless Google chooses that moment to lose its memory.
Trump’s problems with Huawei are twofold. The most obvious is that China is eating America’s lunch when it comes to innovation and invention and Trump would like to slow this down by destroying Huawei and is clearly making every possible effort in this regard, including bullying and threatening half the known world against using Huawei’s products. But this is the small part of the problem; the real issue is espionage. There is no practical value in disputing the assertion that Cisco and other American hardware and software firms install back doors to all their equipment for the convenience of CIA and NSA access. But suddenly Huawei is replacing Cisco and those other American firms with its better and less expensive equipment.
Posted in Business, Foreign Policy, Geopolitics, Governments, Politics, Science, Technology, Trade
Tagged China, Huawei, President Trump, Tik-Tok, WeChat
Chinese-US relations may be far more important for Americans than Covid-19. From Simon Black at sovereignman.com:
Most people realize that 2020 has thrust two game-changing trends upon us that will change the world for years to come.
The first is Covid.
In less than six months, this virus has created extreme global hysteria and economic devastation.
Countless businesses have gone bust or are teetering on the edge. Tens of millions of jobs have been lost.
Government debt around the world has exploded higher. And their heavy-handed abuse of power has been astonishing… often incomprehensible.
Politicians and public health officials have suspended many of our most fundamental freedoms, threatened to come into our homes and take our family members away, and even banished us from our own private properties.
We’ve also seen a breakdown in basic social conventions.
Family and friends have stopped gathering together in person out of fear that someone may be a carrier. Weddings and funerals are virtual. And a simple handshake is practically considered an act of biological terrorism.
And, just like 9/11 nearly two decades ago, many effects of Covid will never return to ‘normal’.
Then there’s the social justice movement… which tore onto the world stage two months ago with a desire to make important cultural changes.
At its core, the movement is virtuous. After all, it’s supposed to be about freedom.
But it has quickly become divisive, menacing, and pointlessly violent.
The Internet’s best economist explains why the New Deal was a huge mistake, and why we’re about to repeat it, except this time only huger. From Alasdair Macleod at goldmoney.com:
So far, the current economic situation, together with the response by major governments, compares with the run-in to the depression of the 1930s. Yet to come in the repetitious credit cycle is the collapse in financial asset values and a banking crisis.
When the scale of the banking crisis is known the scale of monetary inflation involved will become more obvious. But in the politics of it, Trump is being set up as the equivalent of Herbert Hoover, and presumably Joe Biden, if he is well advised, will soon campaign as a latter-day Roosevelt. In Britain, Boris Johnson has already called for a modern “new deal”, and in his “Hundred Days” his Chancellor is delivering it.
In the thirties, prices fell, only offset by the dollar’s devaluation in January 1934. This time, monetary inflation knows no limit. The wealth destruction through monetary inflation will be an added burden to contend with compared with the situation ninety years ago.
Boris Johnson recently compared his reconstruction plan with Franklin D Roosevelt’s New Deal. Such is the myth of FDR and his new deal that even libertarian Boris now invokes them. Unless he is just being political, he shows he knows little about the economic situation that led to the depression.
Posted in banking, Business, Currencies, Debt, Economy, Government, History, Money, Taxes, Trade
Tagged Federal Reserve, Fiat money, Franklin Delano Roosevelt, Gold Standard, Great Depression
The US government’s relationship with the Chinese and North Korean governments has grown increasingly contentious. Are better relations possible? From Patrick J. Buchanan at buchanan.org:
Wednesday, Secretary of State Mike Pompeo met for seven hours at Hickam Air Force Base in Hawaii with the chief architect of China’s foreign policy, Yang Jiechi.
The two had much to talk about.
As The Washington Post reports, the “bitterly contentious relationship” between our two countries has “reached the lowest point in almost half a century.” Not since Nixon went to China have relations been so bad.
Early this week, Chinese and Indian soldiers fought with rocks, sticks and clubs along the Himalayan truce line that dates back to their 1962 war. Twenty Indian soldiers died, some pushed over a cliff into a freezing river in the highest-casualty battle between the Asian giants in decades.
Among the issues surely raised with Pompeo by the Chinese is the growing bipartisan vilification of China and its ruling Communist Party by U.S. politicians the closer we come to November.
The U.S. has been putting China in the dock for concealing information on the coronavirus virus until it had spread, lying about it, and then letting Wuhan residents travel to the outside world while quarantining them inside China.
In America, it has become good politics to be tough on China.
China is determined to squash Hong Kong, which will increase US hostility towards China. From James Rickards at dailyreckoning.com:
Remember the pro-democracy protests in Hong Kong against Chinese authoritarianism?
Well, guess what? They’re about to start again. And U.S.-Chinese relations could get even worse than they are right now.
Are you prepared for a bumpy ride?
Let’s unpack this…
Last year’s protests came in response to a proposed law that would have allowed the extradition of Hong Kong residents to Beijing for trial on charges that arose in Hong Kong.
That would have deprived Hong Kong residents of legal protections in local law and subjected prisoners to torture and summary execution.
The legislation was proposed by Hong Kong’s Chief Executive Carrie Lam, who many consider a puppet of Beijing.
The demonstrations grew exponentially, ultimately involving hundreds of thousands of protesters.
The list of demands also grew to include more democracy and freedom and adherence to Hong Kong’s rule of law.
Due to social media, these protests were seen around the world.