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[–]penelopepnortneyBecome ungovernable[S,M] [score hidden] stickied comment (0 children)


AM: have never attained the kind of granular knowledge of China that I did of Russia but starting to think no one has. It's so vast and complex. A lot of the discipline and clarity that market relations impose don't straightforwardly apply to China anymore.

My own impression - but it's a bit out of date, I was there in 2017 - was of massive overcapacity. An enormous almost bloated manufacturing sector constructed to supply goods to China itself and to the entire world but is probably too big. A massive construction boom that has long since gotten out of control and China cannot easily absorb all the things it's been doing. Retail sector also seems to be completely out of control. I was in Shanghai, which is China's big, commercial, economic hub, saw vast arcades of shops and they were all deserted. Too much on sale for people to buy, it all looked somewhat unbalanced.

Did speak to a friend there, who's Russian and working for a Russian bank; his bank is having trouble finding Chinese companies it could lend to because they're all, by conventional standards, trading insolvently. Struck me this could be sustained only with a very tightly controlled currency and debt issuance that is extremely tightly controlled. So you wonder if those economic controls are like QE in the West, they make things possible for a period of time but eventually the imbalance becomes too extreme to be sustained.

The lockdowns and pandemic response seem irrational but I wonder if they have other motivations, a mechanism to deal with an economy that's overheating in some sectors. And in some ways things looked seriously out of sync.

About the situation with Taiwan: it struck me immediately that a lot of the legitimacy of the CCP is based on the fact it ended that Century of Humiliation.

Every Chinese citizen knows about that, the carving out of Hong Kong, the international settlements in Shanghai - in the 19th century general attitude of the Chinese toward the US was strongly positive because it wasn't seen as a country wanting to carve out bits of China as the European colonial powers were doing. The CCP ended it but not fully, there are still bits that were not reunited with the motherland - Hong Kong, Macao, but the big one is Taiwan. China's process of rejuvenation, as they talk about, can never be fully complete and the legitimacy of the CCP is at issue, and the irretrievable loss of Taiwan would be an existential problem for the CCP. They're never going to allow Taiwan to break away; I don't know to what extent that is understood in the US.

RB: McGregor made the point that Russia had legitimate security concerns about Ukraine, China has them about Taiwan, just as we had them about Soviet missiles in Cuba.

One of the things I hear and don't know enough about is about the semiconductors in Taiwan, if there was an effective blockade around Taiwan it would create serious supply chain issues around the Western world. What's your understanding?

AM: I think it's probably true, understand this applies to the very high-end chips made by Taiwan and South Korea. But South Korea uses most of theirs, they're made by Samsung and they use them for their own products. Taiwan makes them to sell them, they're the kind of chips you find in cell phones. A blockade would unquestionably lead to supply chain issues.

And we come back to the timing, we're in the middle of an inflation crisis around the world, with the US at the center of it. Caused by the Biden administrations utterly reckless and irresponsible spending programs in its first year. So the administration created an inflation crisis, made it worse with its economic war with Russia - disrupted raw mineral, commodity, food and oil supply chains. If China blockades Taiwan, that will disrupt supply chains even more, and will crank up inflation even more.

Just had a new bill passed by Congress, the Inflation Reduction Act; I've been trying to make sense of it. Seems more like an inflation expansion bill, another $800 bn in spending, which is the last thing you need now. You're increasing taxes, esp. on corporations, which will lead them to cut investments, which will affect production. So increase demand and reduce supply. Need to recreate manufacture of chips in the US, then maybe take positions on Taiwan.

RB: Super chat question - everyone who looks at military analysis recognizes how geopolitically significant Taiwan is to China's internal security and safety.

On the economic side you have the Federal Reserve pretending they can manipulate the commercial banks into inducing a recession by increasing rates; it seems like all they're effectively doing is taking down the housing market and the stock market, not reducing inflation.

Add onto that the budget policy that's a combination of 3 things: an attempt to create a global corporate tax by making a 15% tax across Western countries, which in turn I think will be used as the premise for a global digital currency in order to effectively collect and enforce the tax and gather the necessary information to enforce it; reality is the disaster of the economic war on Russia, compounded by going after Brazil, India, China, we're busy doing our African coercion tour - US pissed about Lavrov's happy African tour and Blinken's gotta match it but he can't, no one likes Blinken, not even in the US.

So the economic policy is basically payoff to certain donors, like things being sold as "climate change"; just like Ukraine budget was a Deep State/MIC budget.

The corporate tax isn't going to go anywhere, it will probably fall disproportionately on domestic manufacturers because they're trying to close loopholes that are critical to domestic manufacturing in America, and change accounting rules that will make everything a mess.

The biggest announcement was 87,000 new IRS agents who were just busy buying over a million rounds of ammunition last month. While they're waging lawfare against AJ, politicizing the criminal justice system against DJT, they're going to release about 100k IRS agents on the rest of us.

RB's suit against IRS: in attempting to enforce insurance requirements under Obamacare they were seizing 60 million medical records of 10 million Americans, including every judge and member of his/her family in California; major league baseball, producers, directors, screenactors. I called it J. Edgar Hoover's wet dream of a blackmail file.

AM: the global tax is a lunatic idea, it's unworkable. But if you have a global tax system, that means you have an unaccountable one because which Parliament or electorate group is going to vote to change tax policy. Who's controlling it ultimately?

If you have a government you vote for and it raises taxes, you can vote that government out of power. But if you have a global tax system, you have no recourse. So unworkable but also dangerous and extremely sinister.

RB on trading Brittany Griner for the Merchant of Death: think there was a political element to this, they understand how the Biden administration works. You don't pick up a spy, you pick up a woke star, a lesbian WMBA player, that's who the US will trade anybody for. To trade her for the Merchant of Death is fascinating, I followed the M of Death story for independent reasons; I think the Russians were so upset about the case because of the shenanigans the US pulled. The reality is we loved the Merchant of Death up until he started working with Putin. In the 90s, CIA guys were his partners.

We entrapped him in a way that didn't even involve the US territory or guns or American citizens. Pretext was these guns might be used against Americans someday. By that standard Obama and Holder should be serving time for Fast and Furious.

The judge gave him the lowest possible sentence, said Bout would never have committed the crime without the US making it up. But to prove entrapment, he'd have to prove he had no propensity to do arms deals.

Whelan, the other guy to be exchanged is a low level spy caught in Russia. The other one on the other side is the guy who whacked what they call a Chechen terrorist, what was he doing getting protection in Germany?