Tanker attacks in Strait of Hormuz surge to wartime high, Iran tries choking oil
cnbc.com
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Exports to the US is about 20% of China's GDP [2].
Regardless of any of China's contingency plans, US exports are well above noise-levels.
[1] https://www.statista.com/statistics/268173/countries-with-th...
[2] https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?location...
What you should take note of, is that China's trade surplus tracks the US trade deficit extremely closely, and this has been the case for the last 20 years.
Said another way, most nations in the world run roughly balanced trade. There is only one nation on earth that can sustain large and prolonged trade deficits. Only one. That is the US. So if you are a nation whose entire economic strategy rests on running large and sustained trade surpluses, then you are going to be exporting your surplus to the US, directly or indirectly, and only to the US.
Now in practice, some of that will be direct sales to the US, some will be indirect sales to the US, but at the end of the day, if you want to run a 1.2 trillion dollar trade surplus, then you have to hope to God that the US is willing to run at least a trillion dollar trade deficit, because no other country is going to do that for you, the entire rest of the world may be willing to accomodate a hundred billion or so, but for everything else, you will depend on the US, directly or indirectly, to absorb your surplus.
So to run a current account surplus against the rest of the world of $100, you need to accumulate $100 of financial claims belonging to the rest of the world. There are complexities, for example I switched from "trade surplus" to "current account" because things like interest payments also need to be added in, but with these adjustments, you cannot run prolonged trade surpluses without storing your money in some other nation's jurisdiction.
Now the question is, which nation is willing to accomodate inflows of a trillion dollars a year? That's right, only a single nation is willing to do that. Most nations ban or severely restrict foreign capital inflows. Those that don't ban it, they don't have the necessary financial infrastructure to accomadate the scale of surpluses that China needs to run. This is why I laugh at all these reports of "China is dumping treasuries". China accumulated over a trillion dollars of dollar claims over the last year. That's in addition to what they already had. Why? Because who else would allow those levels of foreign capital inflows into their economy.
So once again, the US is the only nation willing and able to absorb these capital inflows.
Personally, I don't think this is sustainable, it's deindustrializing the US and is highly destabilizing, but since the liberalization of global capital flows launched by the Clinton administration, we have been doing this 30 year experiment in what happens when you let countries print money and use them to buy your bonds. The results have been, in my opinion, highly destabilizing, and it's not going to end well. But many of those who grew up in this period, think this is just how the world works and they can't imagine any other system, one in which capital inflows were highly restricted and as a result, no nation ran large trade surpluses against any other. Or they don't think about this at all and believe that China's hard work and industrial prowess is why they are able to run large trade surpluses, completely ignoring the whole money printing to buy US bonds that is happening in the background. When the US was the world's primary industrial power in the period 1870 - 1920, we ran current account deficits, not surpluses. What China is doing, industrializing while exporting capital -- that is truly unprecedented and possible only due to the combination of fiat non-convertible money combined with the US allowing unrestricted capital inflows. It's a truly bizarre state of affairs.
This is just tautological with the trade surplus. Yes, the two go hand in hand.
My point is that "trade surplus" is always trotted out as if it is some vulnerability of China's - that if we stop giving them dollars and they stop giving us goods, this would create an unsolvable problem for China's economy.
But this is merely fanciful fiction borne from western thinking where we don't have the political will to take sustained direct action to subsidize domestic industry. But China isn't bound by this! Rather it is merely wishful thinking as if we hold power here.
Hence my focusing on whether China actually needs more dollars (ie is reliant on exporting to get those dollars), or whether they could make do with what they've already saved up in treasuries (and other USD investments) while being unable to export as much to the US. My gut says their economy and industry is now large enough that they could weather it just fine. We're still looking at them as if they are the little kid from the 90's (who would have indeed been hurt if we had never started the arrangement), and failing to see that they are all grown up. The pump has been primed.
> the US is the only nation willing and able to absorb these capital inflows... The results have been, in my opinion, highly destabilizing
In my opinion, the destabilizing results were not inevitable. Rather they were the result of deliberate policies that were kept outside of the Overton window by the entrenched interests who were benefiting from them.
Having others say "I'm willing to accept IOUs from you rather than requiring payment in cold hard cash" (aka having the world reserve currency) is an inherently lucrative position! The downsides can only come from how you react to having that ability - a spendthrift might write IOUs without limit and spend all their cash, making the position itself look like a vulnerability. Whereas a frugal person who wants to avoid that fate but isn't very creative might keep a stack of cash that 1:1 corresponds to IOUs they've issued.
The two deliberate policies of which I speak are 1. USD must always inflate (which precludes the frugal option) 2. the legislature/executive government is prevented from spending the newly created money on (most) deliberate constructive activities (like the industrial subsidies I was talking about above).
So most of the wealth we received from having the world reserve currency (represented in-system by newly created money) was simply given away by the Federal Reserve directly to banks (as low-interest loans) to blindly "invest". This resulted in the everything bubble - unproductive assets as a safe haven, intemperate investment in new industries, but failure to maintain the industries we had (since mature industries don't achieve outsized investment returns).
In a different world the legislature would have spent some of that wealth directly subsidizing domestic industry to maintain it, backed up with laws about not being able to move production lines out of the country. But of course this was not in the interest of the corpo class as it would have meant less money going into their own pockets. Hence it remaining on the fringes of the Overton window. (the one place it did actually happen was the defense industry, of course)
Now that the deindustrialization scam has run its course, the corpo class is on to the next thing - economic consolidation to further cement their position. They're channeling echos of what would have been prudent decisions back in the 90's, which makes grassroots voters think they are finally being listened to. But it's nonsensical to talk of closing the barn door after the horse is long gone, right? So in reality they're pushing upside-down bizarro revanchist economics (like framing strong currency itself as a problem!), to destroy the economy that we actually did develop. Then they can mop up and further centralize.
Edit: tanker hit a mine today in Hormuz, going great
It's never 4d chess. it's just a guy desperately trying to get diesel prices to temporarily decline _without_ having to admit that he's a fucking idiot for having dragged America into Israel's war on Iran.
And even then, it's only because of the mid-terms. The GOP does not give a single solitary fuck about the sorts of people who notice and are hurt by gas prices. The GOP despises American workers.
This is not GOP vs DNC. They are fully corrupted on both sides, and stopped representing their constituents a long time ago.
And I'm curious which sanctions by Russia are crippling "the west"?
Considering we only see Russian bots talking about lifting sanctions nowadays and everybody else moved on to other subjects in Europe, it must have some effect of some sort, otherwise they wouldn't talk about it.
> And Russia is in a winning position in the war.
At best, even if they took the full country tomorrow, I don't think there's any way to save Russia from medium term collapse.
They would need a Marshall plan of somebody giving them 300 billions for free and I don't see that happening and who would do that.
> but the West has bet everything on a victory which means they'd rather see it continue to the last Ukrainian
You have it backwards, Ukraine and Europe want a victory so that Russia doesn't continue to kill to the last Ukrainian. (And for Europe more importantly, not being the next one in line).
That's what Russia's policy of destroying cities and killing civilians do.
Well, Iran was offered similar amount by certain somebody, so never say never
And Russia is going to collapse after the war if somebody doesn't give them $300 billion, a small fraction of their GDP, and what Western media now claims they're annually spending on the war? How is that supposed to even make any sense? Similarly for a Ukrainian victory. The war in Ukraine has turned into a classic war of attrition with a small nation against a much larger one. The small nation is already having significant manpower issues, while the large one has yet to even turn to general mobilization. Again, how is a victory supposed to come out of this?
No, I mean actual Russian bots, either paid far rights politicians or online paid accounts. That's the kind of people left talking about sanctions, everybody else moved on to other subjects a long time ago.
It used to be a hot debate in 2022 / 2023, we're way past that now and the public opinion moved on.
> Macron is at 16% and Merz has hit a truly impressive 10%. They've defined their leadership by their foreign policy, so what other conclusion can one draw?
No they haven't, as for France, which I know very well, almost nobody cares about foreign politics on election day.
What's making Macron unpopular is the local debt, ineffective spending, retirement policies, reaction to local events (such as student protests right now), voters don't really care about Russia.
> And Russia is going to collapse after the war if somebody doesn't give them $300 billion, a small fraction of their GDP
GDP isn't government budget. And I was making a low ball estimate yeah, maybe they need 800 billions, I don't know. What I do now is that they dug themselves into a very deep hole and Ukraine is a very poor country (especially now) which is never going to help them make that back.
> The small nation is already having significant manpower issues, while the large one has yet to even turn to general mobilization. Again, how is a victory supposed to come out of this?
I don't know a single war in history which ended because they had literally no men to throw at it.
Russia to me looks to be in a similar position as Germany in 1917, they still had men to throw at the war (and were even making territory gains!) but the country was collapsing due to the weight of the war, forcing them to stop.
What exports of tank components from Russia are detrimental to the west?
Since that is some of many things sanctioned?
How is Russia in a winning position?
You only give assertions without any actual explanation nor facts and is apparently obsessed with Ukraine's leader.
As for the war, it's turned into a war of attrition. Ukraine is facing an increasingly severe manpower shortage whereas Russia has not even carried out a general mobilization, yet continues to inch forward. That's the reason for Ukraine's various recent efforts to try to change the nature of the conflict, but I think that's mostly just opening a Pandora's Box that should have stayed closed. It certainly hasn't left Ukraine in a stronger position, to say the least.
The graph doesn't show that at all.
[1] - https://en.wikipedia.org/wiki/German_economic_crisis_(2022%E...
"regularly mocked" this is news to me? By whom? Russia? Who threatens nuclear war every 5 seconds against any state it deems as a meanie?
Even then, how is mocking = effective? Are vibes how we determine economics?
Secondly: you already acknowledge that one graph is seasonally adjusted and the other isn't.
Which makes very little sense given the little context you give.
But even putting that aside, how do those graphs establish that sanctions hurt the West more than Russia? Russia's GDP went up, therefore sanctions didn't hurt it? What? Which self-respecting economist would ever make such a bizarre simplification of how an economy works? Since you know an economy can grow and still be worse off than it would've been without sanctions, those aren't mutually exclusive.
And yes Germany has been making some very questionable if not downright stupid decisions policy and economically speaking for about 15 years now one being aligning itself with Russia has of course caused huge economic problems for themselves, just look at Hungary and Serbia for similar examples.
Even so: Germany having a shit time doesn't magically tell you how much of that came from sanctions rather than energy dependence, the war itself or its own economic problems. Where have you actually separated those things instead of just pointing at a graph and going "see, sanctions"?
Plus why are you treating Germany as "the West"? Where's the comparison with Sweden, Poland or the rest of Europe? And I'm not asking whether their GDP went up or down.
I'm asking where you've demonstrated that the damage caused by sanctions was greater for them than for Russia, since that's your claim, isn't it?
And Russia is winning because no general mobilization? How? Since: "Hasn't done it" doesn't automatically mean "doesn't need to.", unless you think that not getting medicine for an illness means you don't need it.
Even so how are you ruling out the costs, logistical problems or political consequences of doing it?
Exactly where's the evidence that this means Russia has a load of usable military capacity sitting around rather than capacity that's expensive or difficult to put into the field?
What is "inch forward" here? How much territory, over what period, at what cost, and does it actually put Ukraine in a significantly worse military position?
And how is starting a war not opening Pandora's Box? Or you think it was smart by Nazi Germany to start WW1 and WW2?
> How is Russia in a winning position?
Because US is asking Russia to lift restrictions and not vice versa. If US is in a winning position why do they even need to ask anything from a "losing" side? Winner sets conditions, not asks.
And was Russia a manufacturing powerhouse? Genuinely curious who has more sway there? China or Russia against the west.
Right only that it was Russia that asked for sanctions to be lifted: https://www.reuters.com/business/energy/trump-says-russia-im...
And how exactly is that winning either way?
Russia exports diesel = winning everything?
I guess then if I win going up before my alarm clock I have won everything in life.