Yves here. The US is waking up to the blowback cost of its sanctions against Russia. You have to go well into Efforts to decimate Russian economy threaten to boomerang in The Hill to get to the part about US vulnerability:
Efforts to decimate Russia’s economy to punish Moscow for its invasion of Ukraine could have serious and unpredictable implications at home for the U.S. and its allies….
Energy and food prices are the quickest way Americans could feel shockwaves from Russia’s decline, particularly if Biden takes action against Russian oil imports.
Crude oil prices are up roughly 20 percent over the past two weeks, enough to knock 0.2 percentage points from U.S. gross domestic product, according to economists at Goldman Sachs.
They also expect inflation as measured by the personal consumption expenditures price index to 0.2 percentage points thanks to “higher food prices, increased production costs due to rising commodity prices and increased transport costs due to shipping disruptions.”
[Rachel] Ziemba [founder of macroeconomic advisory firm Ziemba Insights] said a ban on Russian oil imports would largely be “symbolic” and simply send barrels to other markets.
“When we’re thinking of the cost-benefit analysis, it’s not clear to me that the pain here justifies the pain to Russia,” she said.
Michael Hudson gives an overview of the broader implications for the US.
By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is “and forgive them their debts”: Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year
Empires often follow the course of a Greek tragedy, bringing about precisely the fate that they sought to avoid. That certainly is the case with the American Empire as it dismantles itself in not-so-slow motion.
The basic of assumption of economic and diplomatic forecasting is that every country will act in its own self-interest. Such reasoning is of no help in today’s world. Observers across the political spectrum are using phrases like “shooting themselves in their own foot” to describe U.S. diplomatic confrontation with Russia and allies alike.
For more than a generation the most prominent U.S. diplomats have warned about what they thought would represent the ultimate external threat: an alliance of Russia and China dominating Eurasia. America’s economic sanctions and military confrontation has driven them together, and is driving other countries into their emerging Eurasian orbit.
American economic and financial power was expected to avert this fate. During the half-century since the United States went off gold in 1971, the world’s central banks have operated on the dollar standard, holding their international monetary reserves in the form of U.S. Treasury securities, U.S. bank deposits and U.S. stocks and bonds. The resulting Treasury-bill standard has enabled America to finance its foreign military spending and support its deindustrialization-driven chronic trade deficits by creating dollar IOUs that other countries accept. U.S. balance-of-payments deficits end up in the central banks of payments-surplus countries as their reserves, while Global South debtors need dollars to pay their bondholders and conduct their foreign trade.
This monetary privilege – dollar seignorage – has enabled U.S. diplomacy to impose neoliberal policies on the rest of the world, without having to use much military force of its own except to grab Middle Eastern oil.
The recent escalation of U.S. sanctions blocking Europe, Asia and other countries from trade and investment with Russia, Iran and China has imposed enormous opportunity costs – the cost of lost opportunities – on U.S. allies. And the recent confiscation of the gold and foreign reserves of Venezuela, Afghanistan and now Russia, along the targeted grabbing of bank accounts of wealthy foreigners (hoping to win their hearts and minds, along with recovery of their sequestered accounts), has ended the idea that dollar holdings or those in its sterling and euro NATO satellites are a safe investment haven when world economic conditions become shaky.
So I am somewhat chagrined as I watch the speed at which this U.S.-centered financialized system has de-dollarized over the span of just a year or two. The basic theme of my Super Imperialism has been how, for the past fifty years, the U.S. Treasury-bill standard has channeled foreign savings to U.S. financial markets and banks, giving dollar diplomacy a free ride. I thought that de-dollarization would be led by China and Russia moving to take control of their economies to avoid the kind of financial polarization that is imposing austerity on the United States.[1]But U.S. officials are forcing them to overcome whatever hesitancy they had to de-dollarize.
I had expected that the end of the dollarized imperial economy would come about by other countries breaking away. But that is not what has happened. U.S. diplomats themselves have chosen to end international dollarization themselves, while helping Russia build up its own means of self-reliant agricultural and industrial production.
This global fracture process actually has been going on for some years now, starting with the sanctions blocking America’s NATO allies and other economic satellites from trading with Russia. For Russia, these sanctions had the same effect that protective tariffs would have had.
Russia had remained too enthralled by free-market ideology to take steps to protect its own agriculture or industry. The United States provided the help that was needed by imposing domestic self-reliance on Russia. When the Baltic states lost the Russian market for cheese and other farm products, Russia quickly created its own cheese and dairy sector – while becoming the world’s leading grain exporter.
Russia is discovering (or is on the verge of discovering) that it does not need U.S. dollars as backing for the ruble’s exchange rate. Its central bank can create the rubles needed to pay domestic wages and finance capital formation. The U.S. confiscations thus may finally lead Russia to end of neoliberal monetary philosophy, as Sergei Glaziev has long been advocating in favor of MMT.
The same dynamic undercutting ostensible U.S aims has occurred with U.S. sanctions against the leading Russian billionaires. The neoliberal shock therapy and privatizations of the 1990s left Russian kleptocrats with only one way to cash out on the assets they had grabbed from the public domain. That was to incorporate their takings and sell their shares in London and New York. Domestic savings had been wiped out, and U.S. advisors persuaded Russia’s central bank not to create its own ruble money.
The result was that Russia’s national oil, gas and mineral patrimony was not used to finance a rationalization of Russian industry and housing. Instead of the revenue from privatization being invested to create new Russian means of protection, it was burned up on nouveau-riche acquisitions of luxury British real estate, yachts and other global flight-capital assets. But the effect of making Russian dollar, sterling and euro holdings hostage has been to make the City of London too risky a venue in which to hold their assets. By imposing sanctions on richest Russians closest to Putin, U.S. officials hoped to induce them to oppose his breakaway from the West, and thus to serve effectively as NATO agents-of-influence. But for Russian billionaires, their own country is starting to look safest.
For many decades now, the Federal Reserve and Treasury have fought against gold recovering its role in international reserves. But how will India and Saudi Arabia view their dollar holdings as Biden and Blinken try to strong-arm them into following the U.S. “rules-based order” instead of their own national self-interest? The recent U.S. dictates have left little alternative but to start protecting their own political autonomy by converting dollar and euro holdings into gold as an asset free of political liability of being held hostage to the increasingly costly and disruptive U.S. demands.
U.S. diplomacy has rubbed Europe’s nose in its abject subservience by telling its governments to have their companies dump the Russian assets for pennies on the dollar after Russia’s foreign reserves were blocked and the ruble’s exchange rate plunged. Blackstone, Goldman Sachs and other U.S. investors moved quickly to buy up what Shell Oil and other foreign companies were unloading.
Nobody thought that the postwar 1945-2020 world order would give way this fast. A truly new international economic order is emerging, although it is not yet clear just what form it will take. But “prodding the Bear” with the U.S./NATO confrontation with Russia has passed critical-mass level. It no longer is just about Ukraine. That is merely the trigger, a catalyst for driving much of the world away from the US/NATO orbit.
The next showdown may come within Europe itself as nationalist politicians seek to lead a break-away from the over-reaching U.S. power-grab over its European and other Allies to keep them dependent on U.S.-based trade and investment. The price of their continuing obedience is to impose cost-inflation on their industry while relinquishing their democratic electoral politics to subordination to America’s NATO proconsuls.
These consequences cannot really be deemed “unintended.” Too many observers have pointed out exactly what would happen – headed by President Putin and Foreign Secretary Lavrov explaining just what their response would be if NATO insisted in backing them into a corner while attacking Eastern Ukrainian Russian-speakers and moving heavy weaponry to Russia’s Western border. The consequences were anticipated. The neocons in control of U.S. foreign policy simply didn’t care. Recognizing its concerns was deemed to make one a Putinversteher.
What foreign countries have not done for themselves to replace the IMF, World Bank and other arms of U.S. diplomacy, American politicians are forcing them to do. Instead of European, Near Eastern and Global South countries breaking away out of their own calculation of their long-term economic interests, America is driving them away, as it has done with Russia and China. More politicians are seeking voter support by asking whether they would be better served by new monetary arrangements to replace dollarized trade, investment and even foreign debt service.
The energy and food price squeeze is hitting Global South countries especially hard, coinciding with their own Covid-19 problems and the looming dollarized debt service coming due. Something must give. How long will these countries impose austerity to pay foreign bondholders?
How will the U.S. and European economies cope in the face of their sanctions against imports of Russian gas and oil, cobalt, aluminum, palladium and other basic materials. American diplomats have made a list of raw materials that their economy desperately needs and which therefore are exempt from the trade sanctions being imposed. This provides Mr. Putin a handy list of our pressure points to use in reshaping world diplomacy and help European and other countries break away from the Iron Curtain that America has imposed to lock its satellites into dependence on high-priced U.S. supplies.
But the final breakaway from NATO’s adventurism must come from within the United States itself. As this year’s midterm elections approach, Republicans are likely to harp on price inflation led by gasoline and energy as a Biden failure. It’s not clear if the pro-Ukraine propaganda will have lost its effectiveness due to over-exposure. But if Russia wins the war in short order, the Republicans could hammer on Biden for relying on costly, arguably ill thought out, and ineffective economic sanctions America needs Russian oil and gas exports. Gas is necessary not only for heating and energy production, but to make fertilizer, of which there already is a world shortage. That has been exacerbated by blocking Russian and Ukrainian grain exports to send U.S. and European food prices soaring.
Trying to force Russia to respond militarily and thereby look bad to the rest of the world is turning out to be a stunt aimed simply at demonstrating Europe’s need to contribute more to NATO, buy more U.S. military hardware and lock itself deeper into trade and monetary dependence on the United States. The instability that this has caused could have the effect of making the United States look as threatening as Russia.
European officials did not feel uncomfortable in telling the world about their worries that Donald Trump was crazy and upsetting the apple cart of international diplomacy. But they seem to have been blindsided at the Biden Administration’s resurgence of visceral Russia-hatred by Secretary of State Blinken and Victoria Nuland-Kagan. Trump’s mode of expression and mannerisms may have been uncouth, but America’s neocon gang has much more globally threatening confrontation obsessions. For them, it was a question of whose reality would emerge victorious: the “reality” that they believed they could make, or economic reality outside of U.S. control.
______
[1]See most recentlyRadhika Desai and Michael Hudson (2021), “Beyond Dollar Creditocracy: A Geopolitical Economy,” Valdai Club Paper No. 116. Moscow: Valdai Club, 7 July, repr. inReal World Economic Review(97), https://rwer.wordpress.com/2021/09/23.
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The US is waking up to the blowback cost of its sanctions against Russia.
Come mid-terms, by all odds the dems are toast (even prior to the Ukraine blowing-up)– what do the neocons of Team D have to lose?
And it’s not like the pains brought by loss are suffered by them personally…
The Democrats will be toast but here come the Fascist Neo Con Rpublicans who will be just as bad. From the frying pan to the fire is all we get.
Blinken and Nuland are driven by ideology. They know they have only until the mid-terms to try and destroy Russia’s economy. I doubt Joe is aware day-to-day of what’s going on beyond what they choose to tell him.
We will have some ‘democratic tests’ sooner in some countries than in the US that may or may not tell something on what the Western electorates are thinking around this and that, as for instance in France. Will we see a turn to xenophobe junkies all around or not? Will everything hitting European wallets (food, energy, transport etc) have an impact, and in which direction this impact might go is something that scares me. Overly dynamic and frightening situation we are in. Aren’t we?
I agree Ignacio, – it’s as if some giant butterfly flapped it’s wings & we are reaping the resultant whirlwind that might well go by the name of Nemesis. I don’t know but at least in recent history it appears to me that pretty much everywhere in the West, we have the worst leadership at the worst possible time. Talking to a cousin last night who describes the US Gov as Uncle Yosemite Sam.
I would split the consequences: those regarding american corporations and its upper class, and those regarding normal people (those who have to work hard for the money).
American corporations are quite happy, in my opinion. This is pay-day for them: they hope to collect (or take large stakes into) russians and (mostly) europeans assets for crumbs. By assets, I mean the real thing: companies, factories, know-how, even raw materials. And, the european upper class, in my opinion again, will be more than happy to oblige their masters (even if some of them consider themselves as being their peers).
Everyone else will have to go for shopping, will have to fill his fuel tank, will read his pay check, and I doubt that very much of them will say: “Darling, I went to the gas-station: the price has increased by 0.2 percent!” or “Oh dear, this paycheck actually means a 0.2 percent decrease in our purchasing power, did you notice?”
I think people, in their everyday life, count in dollars or euros, how many of them they have in their hands (less and less), and then look at what they can buy eventually (less and less). The dollar, being the world currency of choice or not, won’t be their most important matter in the coming weeks, months or years.
In a normal world, your happiness makes (or at least should make) me happy too. Some will ask, what makes you so happy, could you share the joke, so that I can laugh also? I fear the upper class won’t tell the joke: ordinary people do not enjoy the same democratic values, they do not have the credentials, or the culture, to understand the joke. In their high-sky world, there exist people who do understand this kind of jokes (themselves) and those who do not (the others), and they will want to keep them as much as separated as possible.
I think also that they will try hard (really hard) to keep this separation in place. They could want to control the narrative, the media, the politicians, maybe even, at some stages, use the police or the army, so that ordinary people stay on their side of this sanity barrier.
And, let’s be honest, this is quite normal: why would you invite in your home someone who does not understand neither the conversation nor the jokes?
I m afraid to say that the xenophobes are the only ones who say straight that FR shld leave NATO. Le Pen and Zemmour are considered pro Putin, and indeed, gather ppl from various background for that too. Since the extreme right parties are the sole ones able to beat Macron this time, some very difficult choices may have to be made. Elections are in 1 month. Macron is candidate since…a couple of days and still refuses any debate. He has been running his campaign on public money til then (both FR and EU, as FR is heading the EU for 6 months)
The re-election of Emmanuel Macron is a done deal, I fear so. Recently, an acquaintance of mine told me that this re-election was, actually, good news and the best possible outcome in the best of possible worlds. According to him, the only way to get rid of Emmanuel Macron, and of what he represents, was not to oppose him, but on the contrary to ensure that he wins and continues, unabaited, the disastrous policies of his first term…
As someone else already said, the ruling class (grande et petite bourgeoisie, what you would call the upper class and the PMC) owns the capital and the means of production. But also the political parties, and the means of communication (the medias), and the police, and the judiciary branch, and (in large parts) the unions. It is not possible to fight against that, because there is no tool, no device left which can be used against them.
We cannot, with our bare hands, defeat them — but themselves can.
Do the contrary: Let Emmanuel Macron offshore and sell abroad what is left of industry: it can be rebuilt (it has been done after WW2). Let him privatize the healthcare net, let the ruling class extend the veil of surveillance and repression on the whole society. Do not brake: push on the gas pedal.
People will struggle and suffer, but they are already suffering and struggling. Nevertheless, what will also happen is that these policies will backfire, will hurt and eventually destroy those who enacted them. Let them taste of their own medecine. His solution, he told me with a grim, was inspired from practices of the Middle Ages where, in order to get rid of a poison, you had to drain the blood from the body. There will be casualties, but in desperate times, you have to resort to desperate measures.
At that time, I laughed and called him nuts.
I gave that idea a second thought: in this moment, this exact strategy is unfolding under our own eyes. The Western Democraties (which, for some reasons, are also called the Whole World) are enduring the consequences of sanctions which were not launched by Russia (beside the reciprocal flights ban) but by themselves. The exuberant inflation, disruption of logistical chains, sudden scarcity of vital resources, were caused by their own arrogance, their own hubris, their willingness to hurt and to destroy. The very stupidity of this ruling class is going to kill this ruling class.
After all, there may be some truth in this myth: the scorpio can commit suicide using his own stinger.
You underestimate the double-whammy of corporate media, and defunding schools. Of socializing WallSt on the front-end by the fed, and the backend with 401ks. Why there are so many suicides, because people can’t even see what to blame beyond themselves; Their societies impassioned, unresponsive, moaning in an orgy of denial, while the rot makes its way.
The right is unifying. Le Pen has taken a position under her right wing opponent. Don’t count them out yet.
At the heart of every country’s foreign policy should be a core of rational, self-interest. But from my seat, I am only seeing the self-interest part by a group of self-entitled elite and no rationalism. For proof, where to start? It is in the interest of the west to keep Russia and China divided, Instead the US has forced these two into an embrace like never seen before. The pandemic has wrecked the world economy so a period of growth is needed to stabilize things. Instead, US policies has pushed oil prices up to $130 a barrel and climbing. Through trying to seize control of the European gas market for their own so to control Europe even more, gas prices have shot up to over $3,900 per 1,000 cubic meters for the first time in history. Any higher and it will be a hazard to the ISS. And this will destabilize more than a few EU countries. The rest of the world is being pushed out of the ‘western’ orbit too. Not only has this Ukrainian war slashed wheat exports but this will ensure food riots in all those countries that rely of wheat from Russia and the Ukraine. Also, countries like India and Pakistan – who agree on very little – have both told the US to get off with all their demands that they wreck their economies to sanction Russia. We may see world double-digit inflation before the end of the year. London as a place of safety is now seen as less reliable than the Bank of Zimbabwe. It just goes on and on this list. So what is the US Senate talking about? A no-fly zone over the Ukraine which I call the Declaration of War Against Russia Act. You can trace back all these problems and at the heart of them all are the ideas and decisions coming out of Washington. Maybe this war is all about regime change in Russia so that it can be eventually broken up for profit. But it seems in doing so, they are burning down the west’s reputation and the world’s economy at the same time. I was going to say that Russia will be hardened against any hard recession being an autarky but this reminded me. Scotty from Marketing from Oz used a new term today to describe countries like China and Russia. He described them as an ‘arc of autarky’ so I will be very interested to see if this phrase gets picked up on places like the US and the UK.
The basic of assumption of economic and diplomatic forecasting is that every country will act in its own self-interest.
There is an implicit assumption that country is the same as all of the people in the country.
The resulting Treasury-bill standard has enabled America to finance its foreign military spending and support its deindustrialization-driven chronic trade deficits by creating dollar IOUs that other countries accept. U.S. balance-of-payments deficits end up in the central banks of payments-surplus countries as their reserves, while Global South debtors need dollars to pay their bondholders and conduct their foreign trade.
Getting back to self interest, I think a LOT of Americans no longer see trade with China or trade with anyone as an unalloyed good, despite decades of indoctrination. Economics is not a hard science like chemistry or math – trade and finance is simply not the nebulous idea of “economics” but often a political act, that often determines who gets richer and who gets poorer – as the churchlady says, How convenient (for the wealthy). I think the world is waking up to that just as Americans are.
This monetary privilege – dollar seignorage – has enabled U.S. diplomacy to impose neoliberal policies on the rest of the world, without having to use much military force of its own except to grab Middle Eastern oil.
The US may not realize it but it is driving the stake through the heart of globilization.
I think soon enough we will learn how much of US wealth is due to it being a massive rent extracting machine…
For many decades now, the Federal Reserve and Treasury have fought against gold recovering its role in international reserves. But how will India and Saudi Arabia view their dollar holdings as Biden and Blinken try to strong-arm them into following the U.S. “rules-based order” instead of their own national self-interest?
U.S. diplomacy has rubbed Europe’s nose in its abject subservience by telling its governments to have their companies dump the Russian assets for pennies on the dollar after Russia’s foreign reserves were blocked and the ruble’s exchange rate plunged. Blackstone, Goldman Sachs and other U.S. investors moved quickly to buy up what Shell Oil and other foreign companies were unloading.
….
What foreign countries have not done for themselves to replace the IMF, World Bank and other arms of U.S. diplomacy, American politicians are forcing them to do. Instead of European, Near Eastern and Global South countries breaking away out of their own calculation of their long-term economic interests, America is driving them away, as it has done with Russia and China. More politicians are seeking voter support by asking whether they would be better served by new monetary arrangements to replace dollarized trade, investment and even foreign debt service.
….
European officials did not feel uncomfortable in telling the world about their worries that Donald Trump was crazy and upsetting the apple cart of international diplomacy. But they seem to have been blindsided at the Biden Administration’s resurgence of visceral Russia-hatred by Secretary of State Blinken and Victoria Nuland-Kagan. Trump’s mode of expression and mannerisms may have been uncouth, but America’s neocon gang has much more globally threatening confrontation obsessions. For them, it was a question of whose reality would emerge victorious: the “reality” that they believed they could make, or economic reality outside of U.S. control.
Long term planning. Back in 2002, when Donald Rumsfeld first wanted to call our latest invasion of the Middle East a new “Crusade” nobody knew who the real infidels were. It was right on the heels of our big neoliberal liberation implosion in Russia. And our bombing extravaganza in the Balkans. As it turns out, the real infidel, as always, was Russia. (Why would we invade the Middle East – we already controlled Saudi oil? – and we only really “invaded” Syria, big time, because it was a stepping stone to Russia’s underbelly). Looking at the reasons we hate Russia, the most obvious one is that we are jealous of Russia’s vast wealth. To mention this fact is to immediately draw attention to how very poor America has become. Squandering everything for neoliberal consumerism in an attempt to keep profits circulating in a financialized-spiral-race-to-the bottom was probably done so we could claim to be rich and powerful – so obviously we didn’t need to steal Russia’s resources, etc. But we have been focused from the beginning of 2002 on Russia’s resources. John McCain’s “Russia is nothing but a big gas station.” Right? And our incessant maneuvers to drive a wedge between Russia and the EU/Germany. Our support of Georgian breakaway efforts. Our messing around with Dagestan, and the bombing of the Boston Marathon. Our stubborn refusal to come to terms with Iran. And for almost a decade trying to separate Ukraine from Russia’s influence. And, of course, always pushing NATO further toward Russia’s western border. Not to mention trying to close off Russia’s warm water ports in the Black Sea/Crimea and Latakia (Syria). And on and on. We have been relentlessly pursuing Russia’s wealth since we sent our geniuses from Harvard over there to teach them how to be a neoliberal economy in the 90s. If we had spent the last 3 decades correcting our own dysfunction we would be way better off now. We’ve just been so very stupid it is literally painful to look at it. Forget admitting to it.
Great summary.
Do we still need “leaders” or are we better off figuring out who and what we need to become, and becoming it?
It used to be one thing called Political Economics. Both Economics and Political Science have been impoverished by the separation. Economics became bloodless; Political Science became pointless.
Fresno Dan
The trade deficits are the inevitable result of the dollar being the world’s reserve currency. Since every country in the world needs dollars, they manipulate their currency values to have trade surpluses with the U.S. I think Nixon understood this. I’m not sure Powell or Biden do. The U.S. is bound to have (large) trade deficits. Our oligarchs have taken advantage of this to increase their wealth by deindustrializing. See James Galbraith, The Predator State.
the free traders have no choice. free trade can only be sustained through pillage and plunder. so it constantly has to be expanding by taking other countries wealth, or collapse. we saw how fast it collapsed in the u.s.a. by the year 2000.
the ink was barely dry on nafta billy clintons free trade, deregulation, privatizations, tax cuts for wealthy paraistes, and jim crow laws. countries all over the world including the u.s.a. by the year 2000, fell into depression, or recession.
911 and the dim wit bushes helicopter money pulled the u.s.a. out for a short period. but by 2007, it was apparent to any one who watched nafta billy knew that the jig was up, and down went the worlds economy, and its really never recovered, its just keeps sliding down.
i remember watching nafta billy on t.v. one day, almost gleeful as a older women asked why he is dismantling the new deal, nafta billy responded we cannot live by the new deal forever, i am crafting a 21st century economy.
as he was saying that, everything was collapsing around the dim wits ears.
nafta billy clintons disastrous polices left america a paper tiger.
my questions is, what took russia and china so long to figure this out?
They figured it out a long time ago. There’s a big gulf between “figuring it out” and “doing something effective about it”. Big things take time to accomplish.
We are now beginning to learn about that “gulf”, and “time”.
https://www.huffpost.com/entry/nationalism-is-rising-not_b_10281138
“In a very real sense, Hitler and Mussolini believed in multinationalism, albeit with other nations submitting to their will. Fascism was an assault on the right of nations to pursue their self-interest, and an elevation of the fascists’ right to pursue it based on an assertion of their nations’ inherent superiority and right to rule.”
Is the “arc of autarky” the new “Evil Empire”?
i had a comment on that, but i must’ve hit a wrong button.
since i’m the Autarky Guy, and all.
it has been easy to make the case, locally, for a measure of autarky…or Emersonian Self Reliance…we should preferentially buy the tomato from down the road, than the flavorless one from …wherever. Ie: treat this state,region, county, 20 acres like a country and look to the balance of trade problem.
i expect, in my pessimism, that this case will not be so easy going forward…at least among the more bluecheck and bluecheck adjacent cohorts.
it will be conflated with russophilia and putinlove.
glad i ain’t on social media.
“Look to the balance of trade problem”. That’s a great point to consider, Amfortas.
May I build on your idea a little?
I conceive of the problem of autarky (“self sufficiency”) as having these moving parts:
a. If I make it myself, my standard of living falls. I am not the most efficient producer of _anything_.
b. If I make it myself, there is a floor under my standard of living. My standard of living can’t fall below my capacity to produce.
c. My household consumes stuff I can’t make. Forget efficiency, can your household make a solar panel, a computer, or a tractor?
d. So I need to produce _something_ efficiently enough to generate “foreign exchange” (money) that I can use to buy the stuff I can’t produce for myself.
If I join a local cadre of highly-skilled neighbors, each of whom is pretty darn good at producing stuff I need and can’t efficiently produce myself…well, my autarky-potential increased a lot, right?
So, the “measure of autarky” is low for most individuals, and somewhat, possibly a lot higher, for well-equipped communities.
What’s the “measure of autarky” for your household and community?
Mine’s kinda low. Getting to autarky is a rough road. I’m better than most of my neighbors, but …
Now, that last remark is not a slam on my neighbs; they are very competent people, but tend to be specialists in stuff that won’t be that valuable if the weirdness we’re seeing spins up a few notches.
And this is why I spend so much time trying to get better at my autarky-ness. I have a long way to go, still.
Amfortas: bought some more fruit trees today, a bunch of robot-parts, researched my solar plant install (coming), wrote some more software to run robots with, fed the chix, refurbed the used fertilizer spreader (hay fields) I bought late last year.
Coming up the learning curve on a lot of curves, but… by golly, there’s a lot of curves.
=== Separately, but related…
We ‘merkins aren’t that great at team-work. To do it, we (seem) to need managers. Furthermore, we seem to need hierarchies and social orders in order to achieve coherence in group settings.
How-come?
Social orders are a pain the bottom. Lot of work to maintain one’s place, look cool, buy and pay for the right car/clothes/house etc. and for what? Just to belong to a group that’s very nearly (or more) expensive (effort-level) to belong to than benefits-of-belonging-received.
Isn’t there some way to achieve group coherence without wasting 2/3 of one’s life-force maintaining a social order?
“…If I join a local cadre of highly-skilled neighbors, each of whom is pretty darn good at producing stuff I need and can’t efficiently produce myself…well, my autarky-potential increased a lot, right?”
from yer lips to the goddess’ ears.
mom discovered that something was amiss with the status quo this early morning, set about list making a bunch of stuff i’ve been all but begging for for years.
so i did what i could(buy gas for storage)…and ran around loading up on feed and a few other things i could talk her in to(she’ sitting on the capital).
but all the while, i’m thinking about all that’s still undone….and what i could have done with a mere 10k,lol.
it really does take a village…and i want to build one…but i’ve long feared that nobody would be interested until it’s too late, and resources dry up, etc.
it’s feeling a lot like that “too late” point is approaching.
even out here, where memories of indian raids and carrying water into the house were still alive when my wife was a kid, people simply are not ready for hardship.
i think about the 2 week ice storm last year, when i had the only warm(-ish) house for 20+ miles(!)…and i think about that time in 05 when the trucks just stopped for a week after a hurricane 350 miles away.
i’m ready for all manner of hardship, short of a thermonuclear exchange…at least ready enough that we could make a go of it…but it’s just us, really…me and wife and boys and a few of their buddies…because even with all the evident chaos and red flags awaving, nobody wants to miss the game, or forgo the shopping trip to austin…or get dirty,lol.
no need to worry about acquiring food…because just look at those shelves!…or i can order it online, even waythehellouthere!
if gas gets to $10…and electricity goes up, too…then everything breaks, and there’s no wiggle room…and it will be a shock to the collective psych greater than 9-11, the great wars and the great depression combined.
It is true that at the heart of each country’s foreign policy rests the self-interest of its (socio-economic) elites. Where many analyses run into trouble is with devoting too much attention to the term “rational”. Elites are not rational machines, they are human beings, whose view of both their goals and of the ways in which those goals might be reached are as much a product of perceptions and biases as of objective evidence.
On top of which, as we no longer live in tiny kingdoms run by literally one guy with a couple of his closest drinking buddies, there is also such a thing as “institutional” self-interest, often paired with self-delusion, of the political layer. Which are made even worse when the top decision makers are professional politicians with law degrees and zero experience in economics, international relations, et cetera, which means the Nulands of the world can peddle their stuff that much easier, and as well by the fact that failure tends to be not-in-the-slightest punished but rather promoted.
All a long way of saying – I am fairly certain that this White House THINKS its actions, e.g. sanctioning the Russians, will lead to outcome A (Russians crawling back to beg for mercy) and not at all outcome B (Russia restructuring its economy and trade to survive without the US/EU). Ditto on the argument for de-dollarisation, I am sure the White House BELIEVES that it is doing all that can be done to SAVE the dollar empire, while in reality, err, at the very least somewhat undermining it. And institutional biases and inertia means that they will persist at the “rationally wrong” policies long after everyone has realised that they are not working. I mean, how long has the US been blockading Cuba for, hoping for pro-American regime change? And you can see this in the realm of domestic policy as well.
Now. Insofar as commodities, I think a key pivot point will be what happens in Ukraine over the next 1-2 months. If the Russians can mop up fairly easily, the oil markets, at least, should calm down some. Of course, the US is actually hoping for a long, drawn out “Russian Vietnam” type of conflict, which will not at all cause any economic damage to the US itself whatsoever…
Oh my, The Arc of Autarky, that’s a good one, a real beauty. Right up there with Obsolete Verbalism from yesterday’s comments. Two keepers in two days.
NC is one of my important links to sanity and reality.
Surely only an idiot like ScoMo who doesn’t understand what the word “autarky” means could use it as an insult? Perhaps he confused it with Autocracy.
Self-sufficiency is one of the core tenets of the individual persons of the western cultures (which I think is what we have instead of society now). Autarky is just self-sufficiency writ large. No-one I’ve ever discussed it with has been opposed to the idea, and all have thought it would be good to be an autarky as much as possible, while retaining global trade for good relations and maximum quality goods.
I haven’t seen yet where he used and said ‘arc of autarky’, its not coming up on any google searches yet, but I’m with, he’s tried to use it as an insult without actually understanding the meaning of the word. Autarky obviously sounds like a ‘bad’ word! See – Russians! I can picture the smug look on his face after he said it.
Once this whole thing is said and done a lot more countries are going to be wishing were an autarky.
Its amazing to watch a Prime Minister who never had any substance, principles or convictions, who knows only 3 word slogans, thrashing around lately trying to latch onto something, anything to save his electoral backside. Kinda like the thrashing around of the T-1000 Terminator meeting its final end in the vat of molten liquid in Terminator 2, with all Scomos old sloganeering efforts and cheap tricks coming back to haunt him.
The newspaper reports are saying that he said ‘arc of autocracy’ but I will take my oath that what he actually said was ‘arc of autarky’ when he was actually talking. Our opposition, meanwhile, said what they always say – We agree with everything that the government is doing and we support them fully. I don’t think that they have a firm handle on the concept of ‘opposition’.
Maybe he misspoke (or the translation from spoken to written was garbled) and meant autarchy, i.e., authoritarian.
I mean, who could be against ‘self-sufficiency?’ Unless we want your oil and we want you to buy our agricultural products.
Thank you for your reader-friendly essay weaving together the threads of this complex history.
In 2008 when I wrote up The Worster Principle (When an obstacle prevents somebody from doing what he or she ought, the person will do something else instead – and the person will normally do something that he or she knows how to do and that looks approximately like work) I was aware that it provided an explanation for some weird but very big M&A catastrophes, that my stupid joke about psychology in office life might describe serious aspects of real life.
When in Dec and Jan we were scratching our heads here about the US response to Russian diplomacy w.r.t. Ukr, some were asking, What’s he doing? Is he looking for an easy foreign policy win? Now I’m wondering if it’s just creating a problem so big that it distracts everyone from everything else, including viruses and political unpopularity. If so then I guess the betting turns to, Do the consequences Hudson explains here hit home to voters before or after the midterms?
The way gas prices are increasing in the US it looks like the consequences are gonna hit the Democrats in the next few weeks, and given the complete incompetence Biden’s crew has displayed so far I expect them to panic and make things worse. I can see their poll numbers dropping like a stone from here on in.
Premium at $5.97 and $5.99 per gallon at two high volume gas stations in Windsor Ca this morning.
Costco $.50 cheaper per gallon.
Do keep in mind that Western leaders ARE doing the very best that they can.
Which is terrifying.
still $3.79 way out here…i doubt the owners of the gas stations have had time to linger in the bidness press.
the little place i go…literal mom and pop gas/beer/cig/lunch store…may have been clued in an hour ago, tho…when i showed up to fill all the gas tanks(so 30 gallons in reserve, in case we need it to get wife to san antonio. filled up the big farm truck, too, but won’t be driving it much).
it always takes a day or two for jittery gas prices to arrive in my county.
we’re filling up all the propane manana, as they were apparently still unaware that anything was happening somewhere beyond the county line.
can’t find kerosene with a dowsing rod…but that’s been the case for 2 years, now, for some reason.(for the lamps, etc. just in case)
Well, Biden was, basically installed to bail-out their fracked LNG/ oil export, ethane cracking, bitumen refining pyramid scheme; while distracting from Catastrophe Capitalism’s COVID feeding frenzy, 4.0 as we await results of debilitating PASC as we’re re-re-reinfected by subsequent variants. Let ‘er RIP! Certainly, indentured, uninsured 1099 gig workers will vote for “our” party, who’ve protected them from plutocratic authoritarian fascism… Right?
https://www.theguardian.com/society/2022/mar/05/covid-pandemic-sparks-steep-rise-in-number-of-people-in-uk-with-long-term-illness
Let the 99% R.I.P.?
Let nature take its course,we have too many people and it takes the weakest.
Old useless mouths, the obese,diabetics and minorities reluctant to trust a medical establishment that has repeatedly betrayed their trust.
Roughly 40% of the US populace has co morbidities, think about how much a 40% reduction in the US Populace would benefit the environment.
Let ‘er RIP and reap the profits!
“Do the consequences Hudson explains here hit home to voters before or after the midterms?”
It’s possible that every penny of DNC and RNC electoral funds might be spent on….stickers. RNC will make billions of Biden saying “I did this” while pointing – to be stuck on gas pumps by Repub voters, pointing at the price. DNC will make billions of Putin saying “I did this”, to be used the same way by Dem voters.
Campaign workers will spend all their time pasting one over the other, alternately….
I was thinking about that scene in the Wizard of Oz when Dorothy accidentally kills the witch & the guards say “ding dong, the witch is dead.” Except I feel like I am one of those people employed to guard the wicked witch (disregard the fact that it was an accident). I’m not writing this in the loveliest way, but I’m happy if this plays out. I didn’t think I’d live to see it. I can deal with the pain.
At a certain point, one might be tempted to call an airstrike on one’s own position.
Tell me when and where and I will show up. Good thing, I will confuse the event with a social meet up.
Obfucates the Karma.
from Tom Luongo – on Russia’s biggest gun
…But the big move for Putin is quite simple (H/T to Luke Gromen for this) which is to offer up its oil at a steep discount to the futures price but only in gold, physical gold. The current ratio of gold to oil is ~17 bbls/oz.
All Putin has to do is begin a global run on physical gold. Oil is the M-zero of global trade. It is the trade on which all of the West’s financialization power is built upon. And that foundation is built on the petrodollar. By directly tying Russia’s marginal barrel produced to the price of gold far below market prices does two things.
First it creates a massive arbitrage opportunity for oil and gold that the market will fill. Second, it follows, it collapses the valuations of all assets priced in paper gold to the price of physical. So, either the price of everything collapses to maintain the fiction of $2000 gold or the price of gold rises to meet the new price.
This forces the West to come clean on just how much gold it actually has, creates a massive short-term run on physical gold and forces a repricing of everyone’s balance sheet.
And, that, my friends is the big weapon Putin is holding in reserve. He can afford to sell his oil at a deeply discounted price. I’m thinking 50 barrels/oz should do it. He forces the world to reprice oil in terms of gold, and then, by extension, rubles rather than the dollar.
This creates positive gold inflow into Russia to create a two-tiered ruble — the long-held dream of Sergei Glazyev — a domestic gold-backed ruble and a global circulating one which floats.
https://tomluongo.me/2022/03/06/thanks-putins-war-ukraine-race-great-reset/
It won’t take long for oil to be purchased with gold bullions instead of the USD.
What I dont understand is how much of the $/euro holdings of the Saudis could be used for purchasing gold when most of their $ are with the US Treasury which “manages” their holdings?
But how will India and Saudi Arabia view their dollar holdings as Biden and Blinken try to strong-arm them into following the U.S. “rules-based order” instead of their own national self-interest? The recent U.S. dictates have left little alternative but to start protecting their own political autonomy by converting dollar and euro holdings into gold as an asset free of political liability of being held hostage to the increasingly costly and disruptive U.S. demands.
There’s also the issue of refugees. How will 1-2 million refugees influence European voters? Let’s not forget 2015.
The UK is actually restricting refugees coming from the Ukraine while Denmark has eased its jewelry-confiscation policy for refugees on the grounds that they are too white. :)
This morning the BBC’s flagship morning news and current affairs programme, ‘Today’ had a short interview with Alan Duncan, oil trader and senior Conservative MP (see Wikipedia). (Interview starts just after 2hrs 39mins).
Asked about the oil markets he responded that gas is what matters. Oil is fairly flexible; it can be moved about. But when he woke up this morning the price of natural gas on futures markets was about 450 pence/therm. In the course of three hours it touched 800 pence/therm before falling back. He went on to say that this means the companies that supply gas throughout Europe won’t be able to pay their margin calls in the futures market, they risk going bankrupt in a matter of days and the whole process of distributing natural gas across Europe is now a matter of logistics. The danger is that, although the volume may still be there, the corporate mechanisms, the companies that keep it moving, will have folded. We are on the edge of a dystopian collapse. We are looking at gas which is the equivalent of $600 oil.
“We have to be careful not to sanction ourselves.”
Weirdly, I’ve seen next to nothing on the BBC on the impact of higher energy prices on industry with the exception of this item on fertilisers and food.
When I was a child my aunt worked in a university school of mines. My family often told the story of her being privy to school communications to the big three automakers in Detroit, who were dominant in America at the time. They told the automakers they had two to five years to develop lightweight gas friendly vehicles or it wouldn’t just be poor college students buying VW bugs and that the Japanese imports would eat their lunch because gas prices were going to go up as demand was going to outstrip supply. And that the two years was more likely than the five. The response was Americans love their large cars and there was no market for the smaller cars and higher gas prices was not going to change that. The family was only slightly forewarned as they were told this when my aunt and her husband were the first to purchase a foreign car. They were a two car family, rarer at that time, and 2dollar gas was a real concern for them. And she told them all of the benchmarks in the letters she knew of had been met. They knew the gas crisis was coming. My Aunt always said that what killed Detroit wasn’t the engineering mistakes like exploding Pintos, it was arrogance and ignorance of the real conditions of the people to whom they wanted to sell cars. That the gas crisis opened the door for imports and the Big Three essentially held it open and said come on in. After that they weren’t just competing with each other, but the world, as they threw away brand loyalty because they didn’t want to make a basic useful car people might buy but wouldn’t meet their usual profit margins, so they denied there was a market for something like that.
I’ve been thinking a lot about that the last few days. Washington’s arrogance about Ukraine has reminded me of Detroit. Denial there is a problem, doubling down on their usual methods, and a failure to recognize that marketing won’t guarantee loyalty if the conditions do not merit it. Admittedly there is copious evidence that this brain trust is either incredibly bad at their job or their goals have nothing to do with America’s well being or a combination of both and there is no loyalty to allies or partners, so it is an easier call to say the major players are going to be directly or indirectly driven to do the opposite of what Washington wants unlike Detroit in the late 60s and early 70s.
The reality of this debacle will become increasingly clearer as time goes by. The Biden is doing better than I thought period is long over for me, more of my acquaintances have realizing his administration bites since last fall. I fully expect Biden to be considered one of the worst Presidents in history by the end of his term.
THIS: “My Aunt always said that what killed Detroit wasn’t the engineering mistakes like exploding Pintos, it was arrogance and ignorance of the real conditions of the people to whom they wanted to sell cars.”
I completely concur. As a very young adult in the early ’70s, I watched Detroit dis’ American consumers who were demanding small, practical, well-built, fuel-efficient cars. At the time, I swore I would never buy an American-made car, and I never have. (In one single lapse, I briefly owned a Mercury Tracer, but it was built in Mexico. And it was a piece of junk, merely confirming what I had always believed about American car companies.)
Just wait until the Republicans start impeachment proceedings against him and maybe even Copmala…rock and rolla.
The goddess Nemesis rules.
Please, it’s Canola.
This, ” their goals have nothing to do with America’s wellbeing” is closer to what is being dished out. Good analogy of the original red flag. I suppose if I wanted to demolish an economy, following US policies to date would be how I could accomplish that. I would hardly change any of it. In our case, the dominoes have already fallen over.
Alastair Crooke says that the US goal with the recent sanctions was to provoke a Russian default and bank run that would lead to the ouster of Putin as happened to his predecessor Yeltsin.
https://www.strategic-culture.org/news/2022/03/06/burning-globalist-structures-to-save-the-globalist-liberal-order/
This fixation with Putin even led my Senator Graham to urge some Russian barons to rid him of this troublesome Putin via assassination. The White House had to shoot down this (too overt) suggestion. The Chile model is out of date and we use more subtle regime change methods these days. Sounds like a monkey wrench has been tossed into the Regime Change Playbook.
Putin’s rating went up 10% according to latest polls. Admittedly this might change once the hardship sets in, but it is one thing when a crisis happens due to incompetence of leadership, another when it happens due to attack of outsiders.
Zelensky is a CIA tool. He will retire rich to Florida after ruining Ukraine and Ukrainians. Our Neocons are outright crazy but there is some method to their madness. The goading of Russia into war was meant to fatten NATO and splinter Russia. It is the same method used by common “smash and grab” criminals. But the hegemonic narcissisim stuns me. This whole business smacks of a last ditch Hail Mary pass that will fail spectacularly.
Also stunning to me is the all aboard MSM onto the propaganda express. If there was an ounce of trust in the NY Times and MSNBC, after their cheerleading for the Iraq War, well… the entire MSM with tiny exceptions is just Pravda for Neocons. I have never seen the BS piled so high and deep. OMG and the nuke babble!
Some of my blue check bubble acquaintances have recently been commenting on the obvious propaganda…. Only one anecdote, but if it’s apparent to Liz that something is wrong with the media, then maybe a small crack is beginning to widen…
In South Korean Entertainment Award shows, it is not uncommon to have multiple winners.
Next year, Oscar for the best acting president will be awarded to B and Z.
I think the hail mary pass was intercepted by the other team’s defense and they’re trying to score a touchdown on the interception.
The German govt. is a mess – the Green party and the social democrats demanding more Nuclear reactors and a massive increase in arms spending as well as shipping boat loads of missile launchers to Ukraine – a 180° about turn on their policies of last week. Olaf Scholz, totally overwhelmed by the problems he now faces. Utter subservience to the USA.
France – Macron up for re-election so another waste of time and the rest – forget it.
Add to this the wall to wall propaganda against Russia making any diplomatic solution more or less impossible and all of the ingredients are there for a huge disaster. I see no way back for Russia – they are gone to China on a fast boat and they are not coming back. If Venezuela tells the US to fuck off then I think that we will have a really major problem. Will the US just take the oil? Maybe.
China has to walk a delicate tightrope with respect to its relations with Russia. A full on embrace of Moscow will be very risky for Beijing. China has strong economic ties to the West, and it will not be in its national interests to sever them. I see China trying to broker a peace deal with Russia and the West so as to maintain as much of the status quo as possible. If China fails in this I see them slowly backing away from Russia, though not all the way back. They will try find a sweet spot, That may be difficult, and China may be eventually forced to take sides.
Anthony — I believe China has publicly taken sides RobertC March 7, 2022 at 11:44 am
As I’ve said before
Just like it’s North Korea border, China will not allow US forces to approach that border.
So you argue China will back away from Russia so in another few years the US will try the same in Taiwan leading to potential nuclear war?
Because the barriers to entry for being a propagandist have collapsed along with the plummeting of the marginal cost of spreading (mis/dis)information, these twin tailwinds on the propaganda industry mean the corporate media and official government spin is about to ratchet way up to cover these blowback risks in heaps of unintelligible babble. Russia is repudiating dollar denominated debt all together or promising to pay it in rubles, sparking the risk of default for those with leveraged positions and exposure to said debts (and the credit default swaps and other derivatives that stack up on top of these). Storm clouds are gathering and the true picture will only emerge at the end of the month when books close.
“The next showdown may come within Europe itself as nationalist politicians seek to lead a break-away from the over-reaching U.S. power-grab over its European and other Allies to keep them dependent on U.S.-based trade and investment.”
Just where are these “nationalist politicians”? To my knowledge, most European national-populists are Atlanticists, who would like the American-led world order to continue as if 90’s triumphalism never ended.
I really like this quote (I posted this in another thread recently but it’s probably more a propos here):
“They always played poker with European cash. There was American cash around, flimsy plastic stuff, but most people wouldn’t take American cash anymore. It was hard to take American cash seriously when it was no longer convertible outside U.S. borders. Besides, all the bigger bills were bugged.”
From Distraction, by Bruce Sterling. Published 1998.
Given that it was published just after the Euro came into being, he definitely saw the writing on the wall, though perhaps “European cash” would be best replaced by something like “BRICs cash” these days, I still give props to his prognostication skills. The USA is pushing to make the Russian ruble to be the “American cash” in the above quote…There must be a word for an action that results in the exact opposite of what was intended…
The question is how will Team USA respond to this own goal?
Even more important to pols, how will Goldman Sachs and BackRock and Vanguard respond to the US own goal? / not exactly a joke / ;)
You are referring to:
“U.S. diplomacy has rubbed Europe’s nose in its abject subservience by telling its governments to have their companies dump the Russian assets for pennies on the dollar after Russia’s foreign reserves were blocked and the ruble’s exchange rate plunged. Blackstone, Goldman Sachs and other U.S. investors moved quickly to buy up what Shell Oil and other foreign companies were unloading.” ??
I am confused as to how the US could force European companies to sell off their Russia assets at a bargain price ….. to US companies. Because they can?
Well, and no doubt, see Barbara Tuchman’s book The Proud Tower about western Europe’s visceral fear of Tzarist Russia then, even while the then western focused Tzarist Russia assumed it would be/ could be included in the great western powers. Tuchman’s book “The Proud Tower” is instructive on many levels, imo. The fear is deeper and older than modernist claims, imo. ” A wind from the East.” This goes back much farther than recent modern thinking. For whatever reasons we may or may not understand.
The reason for the US elite’s relentless hatred for Russia all my life has primarily been that Russia is invulnerable militarily because it has nuclear parity with the US, and our elite have always detested that fact, because it completely checkmates their effort to achieve “full spectrum dominance,” in their loathsome phrase. This is why they were unable to offer Russia anything, ever. Even when they had their opportunity to try to influence, exploit, and colonize Russia under Yeltsin (1991-1999), they never dared to bring up the nuclear weapons, because those are the Great Equalizer, and Russia would never give them up. This dangerous standoff does threaten the continuation of both civilization and the human race. The only way out is cooperativism, not confrontationism. Meanwhile, with regard to Ukraine, there is no way to make peace and get Russia out of it without negotiation and compromise, things Washington has no inkling about.
A post by Vladimir Golstein on fb:
“A Little Bit of History.
1610-1612. So called Times of Trouble in Russia. Poles (and Lithuanians) invade Russia (through the territories of the modern Ukraine, obviously), capture Moscow, and install their puppet, so called, False Dmitry. Two years of misrule, cases of cannibalism reported.
1709. Swedish King, Charles XII, fighting Peter the Great, failed to conquer Russia from the north and decided to invade through the southern lands. He convinced Ukrainian Hetman, Mazepa, to join him. Decisive battle was fought at Poltava (the heart of today’s Ukraine).
1812 French invade Russia. Bringing along 20 languages, including Poles. Moscow burned down, desecrated and robbed again.
1914-1920. WWI, Russian Revolution, Civil War. Germans who more or less forced Ukraine into existence, took over Kiev, which changed hands 19 times within this period; Russian-Polish war followed the revolution. Again, modern Ukraine is the battlefield, with plenty of civilians killed including Jews, some newspapers actually used the term “shoah” to describe their plight as the result of all the violence.
1941. WWII. Germans again, and again they march into Russia through Kiev, murdering everything on their way. German forces were as close as 19 miles from the center of Moscow.
And of course, this century mess, both in 2014 and now.
In other words, at least for the last four hundred years, at the beginning of every century, there is trouble or invasion on Ukrainian border.
That’s the context of Russian sensitivities and anxieties about this territory. We are all sensitive to Polish or Baltic anxieties and their fear of Russian invasion. Same sensitivity should be applied evenly to all sides.”
It’s because Finance as in FIRE runs the USA.
It might be time to ask: “what do we – the little people – do about this?”
Do you think the next President will have different policies? If so, why? Different policies imply that the people controlling the policy change their minds.
Are they going to change their minds?
I’ve said many a time that “change, if it’s going to happen, will happen bottom-up, not top-down”
I hope you are well along in your formulation of household policy to cope with the upcoming disruptions. They may arrive ahead of schedule.
====
Thank you again to Dr. Hudson. Your ability to express complex concepts and long trend-lines clearly and simply is without compare in the current discourse.
Bismarck once said, “The job of the statesman is to put his ear to the ground, listen for the hoof beats of the horse of history, figure out where he is and the direction he’s running, and when he comes by to jump on his back and hang on for dear life.”
Will people please come forward to run for the presidency and Congress who are capable of putting their ears to the ground?
You don’t even have to do that, it you follow other saying of Bismarck: “The secret of politics? Make a good treaty with Russia.”
Much less listening and jumping involved.
Those institutions are the domains of the dominant minority who are incapable of such feats. I’ll just quote Arnold Toynbee directly on where the creativity that Bismarck sought still resides in our society.
It’s pointless to look to our present institutions for a solution to our sociopolitical problems. It further occurs to me that the people on the left who didn’t see the war in Ukraine coming are also the same personalities that insist that the empire isn’t on the verge of collapse.
To me this sounds like Britain and France in 1936-40.
Firrst they promise to defend Czechoslavikia and Poland, which they knew they couldn’t do.
Second, they reject the alliance overtures from the USSR, which was as terrifind by the Germans as they were.
Third, when”plucky little Finland” was attacked by the USSR which was trying to insure the potential German ally was out of artillary range of Leningrad ( Finnland’s crusty old semi-dictator Marshall Mannherheim wanted to make the deal; Parliment and public opinion said “No”), the British and French actually spent part of the winter of 1939-40 planning to aid the Finns by violating Sweedish neutrality.
Great… lets make war not only on the Germans but also let’s add Sweeden and the Soviet Union to our list of enemies.
All this nonsense got swept away in thirty days by the Germans in the spring of 1940. Then the realists swept in, first in the form of Churchill and eventually in the form of Roosevelt. Let’s hope it doesn’t come to that.
They couldn’t defend Czechoslovakia? And in the end they went into an actual war over Poland IIRC.
And the Soviets were only as afraid of Germany as Britain?
And why are we still talking about the events of 85 years ago?
Because the stupid error of discarding common European security made back then led to post-WW2 Europe when they made the really stupid error of discarding common European security which led to decades of Cold War and after if finally ended, the really, really stupid error of discarding common European security led to what we have now.
Thanks for this post.
Empires create their own oligarchies or plutocracies. Maybe that’s the tragic flaw of empires.
It’s either the iron law of oligarchy or the golden law of plutocracy …
So is this the trump card? Couldn’t Russia just wipe this clean by nationalizing industry the vampire squids now hold.
Sounds like a private equity financial move. Someone is making money in the destruction. / ;)
Today China praises ties to Russia, sending aid to Ukraine Foreign Minister Wang Yi announced
Two observations:
1. FM Wang’s announcement will be heard very clearly in the capitals of those Near Eastern and Global South countries.
2. What is this “new era” Wang is referring to?
re: to your point 2 question.
Maybe he means a reversal of Nixon going to China detente to open new favorable relations. Beneath the feel-good talk at the time was the determination to split China away from Russia and Russia’s interests in the cold war. The “new era” Wang refers to could be a new China rapprochement with Russia, turning the old Nixon ‘opening’ – designed to move China strategically away from Russia – on its head. My 2 cents.
flora — I can’t disagree with your analysis but my gut feeling is “new era” is something larger than what you described. Interesting times indeed…
Indeed. I assume it’s referring to something like the China-Russia joint announcement on the first day of the Olympics:
Joint Statement of the Russian Federation and the People’s Republic of China on the International Relations Entering a New Era and the Global Sustainable Development
Thank you Grebo! I should have read the entire Joint Statement before but had only looked at excerpts and missed the title. I’ll be reading it later tonight. Thanks again!
I just noticed that site doesn’t have the whole text. The Saker appears to.
Joint Statement.
Joint Statement!
Please search your memory, and recall the instance when these aspirations were set out by two World Powers jointly.
Two world powers which can execute / implement those aspirations.
If you’re wondering why all the grinding tectonic plates suddenly lurched so hard, here is your answer. We are experiencing a global political and economic earthquake.
Next question: what does the West have to do to ante up in this Great Game?
After the dust settles – if it settles as non-radioactive dust – we Westerners are going to desperately need to answer that question.
out standing statement. but it might just be a statement, we shall see.
but sovereignty and democratic control, no free trade!
direct opposite of what nafta billy clinton said when he was dismembering yugoslavia.
The “poly-polar” world that was announced on 4 February 2022. It was odd how the Xi-Putin summit and the announcements out of it were rather downplayed in the West. Here is a link in the Global Times. Unfortunately it is now not possible to see the Kremlin announcement.
The new era was announced by China and Russia on 4 February 2022. We’re now living in it.
you can see why the free traders are in such a panic. blind panic and hysteria that the era of global r##e, free trade is coming to a end.
they are so blind and in panic, that they are willing to blow up the world if they can’t have it.
The elite want to get Americans out of their cars and out of their way. Biden’s deliberate actions have produced the beginnings of that.
6.49$ a gallon.
How on earth can nannies, tradesmen and commuters afford to get to work? Guess one more reason to build government controlled, via non profit proxy, housing projects for the servant class closer to their jobs.
Notice how the elite are suddenly concerned about “Equity” and addressing past redlining? Adiós middle class. It was nice knowing you.
Servants and the served, that’s all there will be soon.
Servants and the served. That’s all there is now. Nothing has fundamentally changed. You either are “the Man” , or you work for “the Man”. It has always been thus in capitalist societies.
Do I understand you correctly that you think that the ruling class wants to build more public housing, or any affordable apartment buildings at all? And you think that is a bad thing? What evidence do you see of them doing that and why would it be a bad thing if they did? Link?
I am going out on a limb and guess that you are not an under-60-year-old living in a major US metro.
It makes total sense, long commutes and low wages means people stay home and the wealthy face their favorite deli closing early for lack of staff.
“What evidence do you see of them doing that and why would it be a bad thing if they did? Link?”
Poor people don’t get much through the California legislature:
https://www.seattletimes.com/business/housing-advocates-seek-funding-to-repeal-california-law/
It would be great if for example, my parents could move into a new inexpensive public housing unit. Trouble is, they are given out by lottery, which anyone from anywhere can enter, and they are immediately taken over by criminal gang families that drive people like my parents out, or steal everything.
maybe he meant “barns”.
pole barns are relatively cheap, as “housing” goes.
put a drain in the corner, and yer all set.
And I’ll go out in a limb here and guess that you’re an American liberal millennial suffering the typical, utterly complete ignorance of how the world works outside US borders.
The OP you’re responding to is clearly from the commonwealth, and probably British. Britain has one of the most extensive and comprehensive public housing programs in the world, and the sad truth is that it is underfunded (on purpose, by the Thatcherite Tories), thus transfoorming much of the “housing” into squalid, vermin-infested nightmare-inducing prisons which the immediate inhabitants of said dwellings are usually prohibited from mending, improving, or vacating.
Gloria specifically said Americans.
Nightmare-inducing is 7 strangers crammed into bunk beds in a 2-bedroom 1-bathroom basement apartment that they can be turned out of on the first of any month. A living hell all over Greater Boston.
If I were China, I wouldn’t be holding a trillion or so in US Treasuries or US assets. Not after Venezuela, Afghanistan, and now Russia. Especially is she’s actually thinking about getting military with Taiwan. Just doesn’t make sense to have so much for the taking when it offers so little benefit.
Observations:
1- PUTIN IS LIKELY THINKING HE HAS TO VISIBLY WIN TO SECURELY HOLD POWER, and that gets harder by the day. Becoming a de facto client state of China will be a bitter pill for him, so what will he do.
2- Russian evasion of sanctions is very likely, with middleman for various commodities pocketing the increases in prices so Russian oil will still reach the market
3- Food prices impacted by the war itself as much or more than by western sanctions. It’s hard to harvest in the middle of a war.
4- Sanctions hurt the west, but not as much as Russia is being hurt. Given the public mood in Europe, sanctions won’t be blamed.
5- Ukraine of course is the biggest loser – their economy is being destroyed, their civilians murdered or fleeing. This will harden their resolve, not weaken it. Ukrainian unity/nationalism is on the rise.
Military notes:
1- Mariupol will likely fall within a week or two – might be enough for Putin to say “win” stop. Don’t bet that way.
2- Kharkiv has been shelled for many days now – so much for minimizing civilian casualties.
3- Watch Odessa over the next two weeks. It will be hard fought, can/will Russia pay the cost to get it?
4- Kherson – the one city Russia has captured outright is showing many protests this week.
5- This extended hardware sales presentation for many military products will reverberate from Beijing to Moscow. Helicopters down. Drones up. Portable missiles waaaaay up. Tanks down .
Side note – geolocated videos of activities across Ukraine can be viewed here:
https://maphub.net/Cen4infoRes/russian-ukraine-monitor
Note that 2 Russian aircraft losses are documented 1 yesterday over Karkhiv and 1 the day before over Kyiv.
6- Civilians who can’t or don’t flee Kyiv now will suffer enormous casualties. As the war bogs down bombardment will increase in all war zones- already in the the past few days we have seen this despite an otherwise relatively quiet weekend.
Unintended consequences
1- Nuclear disarmament is a dead letter. Ukraine gave them up for guarantees and what are those worth now?
2- Climate change falls way down on the priority list. Nuclear up. Natural gas (especially in the US) up. Look for LNG plants to be laid down/built in the Americas. Green energy as a nuclear replacement led to reliance on coal and gas in Germany and guess where that came from? Whoopsie.
Personal note – we have a good friend from the Ukraine with many friends and family still there (many affiliated with a Christian church that has a sister church here in Texas). Most of her friends have fled toward Romanian border – they have not yet decided to leave the country as that would entail leaving the men behind. My friend’s mother is in Cherkasy – a couple hundred kliometers south and east of Kyiv. Mother won’t leave – she’s stubborn. Russians to the north, Russians to the south but Charkosy is quiet for now. Watching closely.
This comment is not up to house standards. We provided a loud and clear warning at the top of Links a couple of days ago that we are in no tolerance mode.
For starters, we take a dim view of armchair psychologizing. In addition, you provide no links. By your remark at the end, one can surmise that your comments re the state of play come from Ukrainian state sources, as in propaganda, which has wildly exaggerated how well Ukraine is doing.
China began stocking up on fertilizer months ago. They knew and were planning. I’d imagine that fertilizer will be offered to countries in need, further building a relationship.
The problem with using the dollar as a weapon is that this weapon can only ever be used once. TINA works, until it doesn’t.
I have come to the conclusion that America’s elites not just ignorant, arrogant and usually corrupt.
Many are quite clearly deranged as well.
they HAVE A PLAN!
Oh, shit.
Thank you Dr. Hudson for this analysis. It is equal parts revelatory and shocking to be honest.
Two big concerns I have involve how quickly this new formative world order will take root (implications for the dollar, and markets especially), and your opinion about the short term, mid-term responses – what they might be?
And the second involves a deeper question. Maybe I need better reading comprehension, but it appears in a several places that you mention the US is helping Russia (and presumably others) de-dollarize as well as force their adversaries/allies to develop new solutions to current problems or sanctions. What are the US doing in these situations, and why would they take this particular tact (two of the more obvious ones included pushing China-Russia together through years of policy, and the fomenting of unrest in Ukraine (Maidan, Odessa, Donbass) and the region (Kazakhstan)?
Thank you for your work and scholarship! Grateful you exist!
Haha. Well, you’re asking me to explain why the Biden administration is so stupid.
i don’t know WHAT to say.
They seem to have a visceral hatred toward Russia, and don’t care about anything else.
let’s popularize two terms: The Biden Inflation,
to be followed by
The Biden Depression
could it really be as simple as them smoking their own stash?
that’s even more frightening than some illuminatii cabal at a ski resort pulling puppet strings.
and bubbling up from the depths:
“The earth has become small, and on it hops the Last Man, who makes everything small. His species is ineradicable as the flea; the Last Man lives longest.
“We have discovered happiness” — say the Last Men, and they blink.
They have left the regions where it is hard to live; for they need warmth. One still loves one’s neighbor and rubs against him; for one needs warmth.
……
One no longer becomes poor or rich; both are too burdensome. Who still wants to rule? Who still wants to obey? Both are too burdensome.
No shepherd, and one herd! Everyone wants the same; everyone is the same: he who feels differently goes voluntarily into the madhouse.
“Formerly all the world was insane,” — say the subtlest of them, and they blink.”
-Nietzsche, Zarathustra.
Wah!
Here we are, yet again, trying to transcend ourselves, and the paving stones are well-worn from our ancestor’s footsteps.
What do we have to do differently from all the horde that’s been up these same steps before… to finally crest the hill?
Had a cook out this weekend with family. Both liberal and conservative in the family all spoke from the same book. Russians are a joke. Army running out of gas, etc, etc. They were all a little shocked when I finally said “but Russia is going to win.” It’s only been a week of sanctions and aside from gas increases, they have no idea the frieght train that is about to hit them. I believe my family is no different than American elites in politics, academia, media, and business. They all drank the Kool aid of American exceptionalism, ignoring the constant flow of failures for the past 30 years.
There is a great new podcast called American Exception by the scholar Aaron Good who is outstanding on the subject – definitely something to check out as you seem to be ahead of the curve. Cheers.
https://www.patreon.com/americanexception/
Great point! I thought I was missing something – but stupidity and hubris account for much of this.
Be glad to popularize – “Biden’s Inflation and Depression”; might need a sponsor, Viagra perhaps did wonders for Dole.
Thank you for your response Dr. Hudson!
Who in the hell are these delusional people, and who put them in charge?
Blinken is the spoiled son of a founding director of Warburg Pincus and the Nuland/Kagan beast are likewise spoiled half-wit rich kids with legacy degrees from ivy’s where they were nonetheless outsiders due to not being WASPs. Their unifying character trait appears to be a sociopathic lack of empathy for the suffering of other human beings. They only know how to act as bullies and lack any comprehension of how other cultures might respond. The misery of Iraq, Afghanistan, Libya, and Syria are their legacy — why would “Ukraine” turn out differently?
The governing elites of Russia, China, India, and Saudi Arabia will be more than happy to take advantage of the tantrum-based policies of an America that has abandoned the industrial base that was the foundation of its hegemony after the Second World War.
Terrific article.
putin dared to say no to nafta billy clinton. remember, free trade can only exist as long as they can pillage and plunder, take that away, and it collapses.
we saw that in 2008, and its still going downwards today.
without russia to plunder and pillage, the hand writing is on the wall, this sucker is going down.
the free traders know it, and they will not rest till they get what they want. the plunder and pillage of russia would take many many decades to play out. thus sustaining the unsustainable.
but at the same time filling up the pockets of the global oligarchs for a while, they will only be satiated as long as there is plenty to plunder.
hitler understood this well with mein kampf, and musolinni understood this well with empire.
anyone who dared say no to them, ended up dead or in a concentration camp. as the article points out, its what nafta billy did.
https://worldaffairs.blog/2019/09/29/why-putin-hates-the-usa-or-what-the-us-really-did-to-russia/
Imperial autodefenestration? Davos Man is going to get his Great Reset, but not in the manner of his choosing.
” If Russia wins the war in short order…”
It may be the case that such an outcome is no longer possible.
Hans Morgenthau (a famous realist) stated back in 1948 that a nation should “never put itself in a position from which you cannot retreat without losing face and from which you cannot advance without grave risks.”
Morgenthau used that observation to critique U.S. foreign policy in Vietnam– put it can now be applied quite nicely to the situation Russia seems to presently find itself in Ukraine.
“Winning” needs a bit of definition.
Ukraine cannot win in the sense of driving Russia out by force of arms.
Russia is very unlikely to win with replacing the current Ukrainian government with a Putin puppet.
Also very unlikely, effectively disarming the Ukraine.
Keeping the Crimea and cutting the Ukraine off from the Black Sea may be doable and might be an acceptable “win” for Putin, depending on a host of factors.
Funny. That describes the American position wrt Ukraine just as well.
Yes, and on commodity prices. Fancy that.
Thanks, Dr. Hudson, for clarity and concision in analyzing the dollar and its looming dethronement:
I continue to promote consideration of balanced trade, in which trading pairs of sovereign nations facilitate bilateral trade by negotiated exchange of their respective currencies between corresponding central banks. Reliance on the USD for settlement of international trade and currency reserves should be recognized to be far too risky compared to the benefits it provides.
I have long wondered what if the “haves” and “have-nots” were isolated from each other. My definition of “haves” happens to be the countries currently sanctioning Russia: Five-Eyes, Europe, Japan, SK.
I think obviously the “haves” would miss the resources and cheap labour that supports their posh lifestyle. Would the “have-nots” suffer?
In the face of the Dow crashing except for energy stocks, Congress passes out of committee a bill to ban importing Russian oil. Western government ruled by and for corporations is deranged. As this article indicates, the coronavirus pandemic proved, and Fresno Dan wrote, a stake has been driven through the heart of globalism.
World War III has started. It is just that the nuclear armed participants have not yet started shooting at each other but certainly will if the Neo-con-liberal Death Cult remains in charge. They are moving heaven and earth to start a guerilla war with Russia on the bodies of dead ethic Ukrainians and mercenaries. The lure of looting Russia’s resources is simply too great.
The future does not look great. Next winter in midst of an economic depression, the Europe Union will have to nationalize the natural gas systems or they will seize up and freeze people. Some States may join the Russian/China axis to stay warm and supplied with energy, food, and goods. If it gets tired of fighting Ukrainian freedom fighters/neo-Nazis, Russia will invade NATO members who haven’t yet switched sides. Tactical Nuclear Weapons are the only way to halt a Russian invasion.
The only expression of American security interest has been the asinine “fight them over there so we don’t have to fight them here”. To top that off the fighting relies on hired guns and Nazis. When congress, wearing Ukeranian flag pins, attends the State of the Union speech given by the emperor with no clothes, they are not given any message of the national interest of the United States that justifies what action or inaction taken. The hybrid war is fought by the state via the mass media and social media seems to target the populace with propaganda, not against real soldiers and real tanks on the ground. Now the same government that sanctioned Iran and Venezuela on spurious grounds is hat in hand begging for oil because it sanctioned Russia. The structure is too rotten and corrupt to be trusted with governing the premier military force in the world.
Ran across this 2014 YT interview with Sergei Glaziev – Advisor to President Putin on Ukraine (mentioned in above article).
If one didn’t know the date recorded one would think it was recorded but yesterday. His summary way back then is equally applicable today.
(It’s Russian language – so select the English subtitle.)
The irony is that the US has destroyed its own empire in its desire for absolute control and power.
It was inevitable that there would be a backlash to the expansion of NATO and the sanctions. I think that the US is used to forcing its way around. Sanctioning a nation like Russia is different from sanctioning a nation like North Korea.
One bright spot is that the Russian oligarchs might be forced to invest domestically and this will be a shift away from neoliberalism. Hopefully Russia can someday become a major manufacturing nation and not just a nation where rich people rent seek off of natural resources.
It will be some time before the full extent of the consequences becomes apparent to the ruling elite, who have vastly overestimated their intelligence and competence.