Moon of Alabama Brecht quote
July 26, 2021

U.S. - China Talks Point To A Longer Conflict

The U.S. wants to slice and dice its approach to China. It will use all means to take advantage of China where it can, while restricting China in those fields were it can no longer compete with it. The Chinese reject that approach. The U.S., they say, should not see China as an enemy. It should stop lecturing China, accept it as an equal and cooperate with it in all fields.

The U.S. is unwilling to do that. Its media-military-industrial complex is already primed for a cold war with China. Trillions of dollars are to be made from it. China on the other side is ready to play hardball if it must.

Today U.S. Deputy Secretary of State Wendy Sherman held talks with the Chinese Deputy Foreign Minister Xie Feng, She also meet with Foreign Minister Wang Yi. The later meeting, demanded to be the main event by the U.S., had already led to some squabble. Wang Yi is beyond Sherman's rank and her main discussion, the Chinese insisted, should be with a person on her own level:

The State Department emphasized Sherman will have “senior-level” communications but a statement from China’s Foreign Affairs Ministry emphasized that Sherman “will hold talks” with Xie and after that Foreign Minister Wang will “meet her.”

On Saturday two 'senior U.S. administration officials' gave a preview of the talks:

As Secretary Blinken has said, the U.S. relationship with China will be collaborative where it can be, competitive where it should be, and adversarial where it must be. And we expect all dimensions of the relationship will be on the table for discussion during Wendy’s meetings.
In Tianjin, [Sherman is] going to make clear while we welcome stiff and sustained competition with the PRC, everyone needs to play by the same rules and on the level – on a level playing field.

She’s going to underscore that we do not want that stiff and sustained competition to veer into conflict. This is why the U.S. wants to ensure that there are guard rails and parameters in place to responsibly manage the relationship.

The second official added:

So let me also put this meeting into the context of the administration’s broader China policy effort. Since President Biden took office, we’ve put a lot of focus on strengthening our own competitive hand vis-a-vis China through many actions that we’ve taken domestically, investing in ourselves at home. We’ve also rallied our allies and partners, including to advance an affirmative vision of the rules-based international order. And we’ve confronted China when they’ve acted against our interests and values while working to cooperate with China on areas like climate change and nonproliferation.

We know we’re stronger when we work with our allies. We know this makes us more effective when dealing with Beijing. We aren’t seeking an anti-China coalition in our work with allies and partners, but rather trying to work together in a multilateral fashion to uphold the international rules-based order.
With all of those actions underway, we’re entering this engagement from a position of strength and of solidarity.
Even as we meet with our Chinese counterparts, we will also continue to hold China accountable. These things are not mutually exclusive, and it should be clear that we are not afraid to impose costs for China’s behavior that undermines international norms.

As Peter Lee commented with his usual snark:

chinahand @chinahand - 16:43 UTC · Jul 24, 2021
"We're going to keep kicking your ass. Don't kick back, 'kay?" Our fate now that dime store Machiavellis, excuse me, generational talents, run the FP show.

The emphasized words were not welcome in China. On Sunday Foreign Minister Wang Yi responded in an interview with an attack on U.S. exceptionalism:

“The United States always wants to exert pressure on other countries by virtue of its own strength, thinking that it is superior to others,” Foreign Minister Wang Yi said on Saturday.

“However, I would like to tell the US side clearly that there has never been a country in this world that is superior to others, nor should there be, and China will not accept any country claiming to be superior to others.

“If the United States has not learned how to get along with other countries on an equal footing by now, then it is our responsibility, together with the international community, to give the US a good tutorial in this regard.

Today, after the talk between Sherman and Xie, the Foreign Ministry published a series of strong response snippets by Deputy Foreign Minister Xie Feng:

I especially like the one about the 'rules based international order':

On 26 July, during his talks with U.S. Deputy Secretary of State Wendy Sherman, Vice Foreign Minister Xie Feng made the comment that the U.S. side's so-called “rules-based international order” is an effort by the United States and a few other Western countries to frame their own rules as international rules and impose them on other countries. The United States has abandoned the universally-recognized international law and order and damaged the international system it has helped to build. And it is trying to replace it with a so-called “rules-based international order”. The purpose is to resort to the tactic of changing the rules to make life easy for itself and hard for others, and to introduce “the law of the jungle" where might is right and the big bully the small.

The SCMP summerizes:

China has for the first time given the US a list of red lines and remedial action it must take to repair relations, including lifting sanctions and dropping its extradition request for Huawei financial chief Meng Wanzhou.

Chinese foreign vice-minister Xie Feng told US deputy secretary of state Wendy Sherman on Monday morning that US-China relations had reached a “stalemate” and faced “serious consequences”, according to a Chinese foreign ministry statement.

“The foundational reason is that some people in the US are treating China as an ‘imagined enemy’,” it quoted Xie as saying.

After the meeting, Xie said China gave two lists to the US – one with one remedial action for Washington to take towards China, and the other a series of Beijing’s key concerns.
Xie said the Chinese side also “expressed its strong dissatisfaction towards the wrong remarks and actions of the US” in relation to investigations into the origins of Covid-19, Taiwan, Xinjiang, Hong Kong and the South China Sea.

“We urge the United States not to underestimate the strong determination, firm will and strong ability of the 1.4 billion Chinese people to safeguard national sovereignty, security and development interests,” state news agency Xinhua quoted him as saying.

In its summary of the talks the Associated Press points to the basic difference in the approaches:

High-level face-to-face talks between U.S. and Chinese diplomats on Monday highlighted sharp differences between the sides, although the tone appeared somewhat less contentious than at their last meeting.
Xie said China wants to seek common ground while shelving differences, highlighting a divide in the basic approach to their relationship. The Biden administration has said it will cooperate in areas such as climate but confront China in others such as human rights, describing the relationship as collaborative, competitive and adversarial.

As the U.S. is for now rejecting the Chinese offer for burying the hatchet China will have to play hardball. It will not be cooperative in the fields where the U.S. wants it to be cooperative (Iran, North Korea, etc.). It will also be adversarial in fields where the U.S. has little ability to push back (rare earth exports, Boeing 737MAX re-certification).

The U.S. hopes that it can find and press 'allies' into confronting China. But Europe already rejected that. To others, especially in Asia, the U.S. looks like a declining power because it is a declining power and the economic interests of most nations now favor China. Under these circumstances I for one fail to see how the U.S. could win in a longer cold conflict.

How long then will it take until the U.S. recognizes that and steps down from its illusion of supremacy?

Posted by b on July 26, 2021 at 16:20 UTC | Permalink

« previous page | next page »


Scary stuff. We can only hope it doesn't develop into this.


I wish I had your faith in MAD as a doctrine. It's weakness, to me, is its all-or-nothing quality. I suspect that escalation will be slower, more piecemeal, at least initially. (Perhaps this is just a hope.) Because of this, I'd guess that a strike on satellites would be risky for China or Russia in terms of what it implies (namely, that a major strike is forthcoming). A strike on London? Who knows what that would lead to - but the catastrophic loss of life would put enormous pressure for a strike on whichever power launched the attack, and something either proportionate, or an escalation. But how many millions live in Metro London? And what would be proportionate? Moscow? Shanghai? Once a civilian strike takes place, and particularly one of that enormity, it's difficult to see how things could remain under control, rather than racing towards a more catastrophic conclusion - just as you note. scary.

Posted by: out_there | Jul 27 2021 5:17 utc | 101

@ pogohere | Jul 27 2021 4:50 utc | 98 with the link to the Inclusive Capital Parteners link to Pope Francis and the Catholic church

I noted in the quote the following part
The Council’s founding, spearheaded by Managing Partner of Inclusive Capital Partners Lynn Forester de Rothschild, illustrates a collaborative effort of the environmental, social and governance-focused practices occurring in the economic landscape already.

And just above that quote is the bit about "“Faith cannot be used to pull us apart. Faith is meant to bring us together.”" from the CEO of Mastercard.

Over the years here at MoA I have posited more than once about what I believe to be a Devils pact made back during the early Enlightenment time period between the losing cred monotheistic religions and what was then the cult of global private finance. Now we are seeing that relationship being brought out of the closet and put before the public with a straight face.....just have enough faith in us and all will be well.....just forget about that logic and reason stuff....these finance folk are doing God's work...

China has a totally secular government where if you belong to a religion you can't be part of the government or belong to the party. The dream of America was to have the same but in the 1950's with the scare of "godless communism" the US motto was changed from the original of E Pluribus Unum (socialism) to In God We Trust (Devils pact between God of Mammon cult and, in this case, the Catholic church)

The shit show continues until it doesn' everyone paying attention?

Posted by: psychohistorian | Jul 27 2021 5:22 utc | 102

Scary indeed. I don't want to bore this blog with nuclear game theory, but it is very near impossible to use a nuclear weapon on China and not have full-scale nuclear war immediately.

China would immediately launch 100's of nuclear weapons at the USA...USA launches ICBMs...Russia cannot afford to wait to see where they are directed immediately launches everything they have at USA, Europe and Israel.

Anything else is a very big strategic mistake.

Posted by: J-Dogg | Jul 27 2021 5:27 utc | 103

@Posted by: Gordog | Jul 26 2021 22:25 utc | 58

You make excellent points. China has a highly successful development Party-state, dominant in society, and run by a meritocratic bureaucracy.

Putin was able to rescue some significant pieces from the wreckage of the 1990's, but Russia is still heavily de-industrialized when compared to the USSR and is predominantly a primary industry economy. Attempts to redevelop industrial capabilities are hampered by the lack of a development state, together with the power of the resource oligarchs to block change (e.g. new energy technologies). A big chunk of the successes are also from the power of the siloviki (the Military/Security Industrial Complex) to protect and foster certain industries. Russia is actually quite a neoliberal economy, low taxes (especially on the rich), small government with tightly managed finances, independent central bank etc. Putin himself has to play a balancing act between the oligarchs, siloviki, his St. Petersburg gang, etc. A recipe for inertia rather than change. He is trying to consolidate power more, but it is a slow process.

The alliance with China is the least worst option for survival given the aggression of the West, but it places Russia at a serious long term risk of being a resource colony (fossil fuels, raw materials, food, transport corridors) for China. The Chinese development Party-state will work out how to make the things that Russia makes, quite possibly significantly cheaper. As China continues to get richer, and its currency appreciates, Russia could also become a major outsourcing destination for China - full of well educated cheap workers. Probably the best long-term option that Russia can expect.

Posted by: Roger | Jul 27 2021 5:34 utc | 104


I may be blinded by hope, but I'm not sure I see China's logic in a total launch, rather than in something more measured. I can perhaps understand how China might want to declare in advance that this is how they would respond to any nuclear strike of any kind, but after the fact of such a strike, it's not obvious to me that they would in fact do just that - since that would be (effectively) the end of world as we know it. I'd hope they'd adopt a more proportionate response - but then, to talk of "proportionate responses" when talking about death and destruction on the scale I'm assuming seems more like wishful thinking than likely reality.

I do hope you are wrong in your scenario, because I fear such a strike by the USA is indeed a very real possibility. (I recall reading online a survey of Americans about their views on the use of nuclear weapons and it was very worrying what a large percentage were in favour of such a use - and how many of those surveyed seemed to presuppose an invulnerability or, at least, an indifference to harm to their own country. Worrying indeed.)

Posted by: out_there | Jul 27 2021 5:45 utc | 105

@uncle tungsten #88
When was it, not too long back, during the Obama administration? Taiwan and China were doing a lot of travel back and forth. A lot of Taiwanese would actually welcome joining China. There are cross-strait relatives. Much of their time since the breakup with China was under a dictatorship with Chiang Kai-shek, not so pleasant especially for those who had been loyal Chinese citizens.

Posted by: HelenB | Jul 27 2021 5:51 utc | 106

@HelenB | Jul 26 2021 23:19 utc | 63

Thanks for that first hand report. Quite informative!

Posted by: Norwegian | Jul 27 2021 5:54 utc | 107

Many here seem to still harbor a mindset framed by western MSM from years ago regarding strategic importance of Taiwan in containment of China. C'mon, ain't it time for you smart MOAers to throw those MSM incited garbage into your nearest shithole?

Taiwan has a strategic role to play when China had no navy to speak of, no air power to rival Americano's, and no means to stop western warmongers from stocking up offensive weaponry as they did prior to attacking Vietnam, Yugoslavia, Iraq, Syria, et al. Yeah in those days Taiwan was a strategic pin, one that underpinned the first island chain. But things have long changed. Details of these changes are well known actually to those commenters who are still calling Taiwan a strategic asset of the west. Taiwan stands no chance of impeding a China attack for more than a few hours. In those few hours, bases in Yokosuka, Okinawa, Guam, et al are similarly smothered. And try if you will to sneak stock piles of weapon into Taiwan, see how far and how much you would manage to put in place.

In a military confrontation, Taiwan is completely useless in slowing down China's advancement to wipe out Guam, incapacitate Hawaii, and wrap around to take revenge of the 35 million Chinese that Japan had sent to the underworld from 1931 through 1945. Since it is a military confrontation, China would have the legitimacy, and the capability, of going the extra miles to ensure victory. China has not taken actions against Taiwan because China does not want 23 million burdens on hand to feed, to rule, and to deal with. These days mainland Chinese have little affinity for the majority of those who call Taiwan home. All China wants is for Taiwan to remain in international understanding as a part of China, so that Americano or Japan or anyone else have no legal rights to arm or rule Taiwan. Let them play their vain game of being in bed with either Americano or Japanese, how would that hurt China's feeling if China has only contempt for just whorish antics.

Of course, as time goes by, it would become a matter course for all concerned that Taiwan should join up with China as that's the right thing to do. At that time China would issue the conditions under which Taiwanese would be allowed to come under its wings. That's the peaceful unification China has been talking about.

Posted by: Oriental Voice | Jul 27 2021 5:55 utc | 108

At the beginning of the thread people were talking about "international rules based order".

It struck me that US foreign policy can be explained by using a Roal Dahl quote: "I'm right and you're wrong. I'm big and you're small, and there is nothing you can do about it".

Victorian englishmen travelled the globe, enslaving nations and stealing the wealth of millions, but at least they claimed to have some sort of moral cause to bring enlightenment to the savages. Complete nonsense of course, but a driving sense of moral force nonetheless. What do exceptional Americans bring to the table with their chance to rule the world? "I want! That's mine! Gimme now!" An empire run by tantrum - ridden toddlers.

Posted by: Occasional poster | Jul 27 2021 6:28 utc | 109

J-Dogg out_there

China at the moment doesn't have many nukes. No mutually assured destruction between China and US. Russia has been ( perhaps completed) setting up an early warning system for China. For the US, nuke war with China is survivable.
Russia has told US any nuclear strike against its allies will be considered a nuclear strike on Russia. I think it has now sunk into the exceptional US minds that Nuke war with Russia is not survivable.
US plan was to fight a limited war with China and having them capitulate at the threat of nukes. That dream disintegrated with Putin's announcement that an attack on allies would be considered an attack on Russia.
That was reinforced by the Russian envoy to Jerusalem when Trump wanted to nuke Iran, who stated publicly at the presser afterwards that Iran was an ally of Russia.

Posted by: Peter AU1 | Jul 27 2021 7:06 utc | 110

Peter AU1 @101

Good point - if China is in fact a military ally of Russia. As I've noted along my comments (74,78,86,90,97), it is not obvious that this is so. It's not embodied in a formal treaty, for instance (the Friendship Treaty does not say this, for instance). Nor has there been a public statement to this effect, so far as I know. And it's far from obvious that the Russian military leadership would link its nuclear policy in this way, particularly if we were talking about a local - "tactical" (non-ICBM) - nuclear strike, given that doing so would imply that Russia's nuclear capability could be triggered by China's acts (for example, action concerning Taiwan.

If there's something I'm unaware of where a military alliance has been declared, I'd be grateful if you could point me toward it.

Posted by: out_there | Jul 27 2021 7:23 utc | 111

out_there 97

At the first US strike Russia launches Armageddon. Nothing spiraling out of control there. Depending on Russia's defenses, it may no longer be mutually assured destruction. Hopefully Russia has reduced it back to US assured destruction.

Posted by: Peter AU1 | Jul 27 2021 7:27 utc | 112

@110 Peter AU1
Yes, China has a lot less nukes then the USA, but a lot more than is commonly recognized. That 200-300 number that has been bandied around since 1980 is quite a bit too low.

While nuclear war is survivable for the USA, having 100 of your largest cities hit with multiple warheads along with some strategic military targets is probably enough to collapse the United States. After the initial carnage, the lack of social cohesion will do the rest.

I guess my larger point, however, was that you can't use a nuclear weapon on China, and not touch off full-scale nuclear war with Russia.

That said, your point is spot-on and supercedes what I was trying to get at.

Posted by: J-Dogg | Jul 27 2021 7:30 utc | 113

Peter AU1@112

Perhaps Russia does, but perhaps it doesn't. As I said when noting that MAD as a doctrine is all-or-nothing, it's not clear to me that such an overwhelming response would be their response. I'd have thought it would depend on the nature of strike itself - if it struck a military installation, for instance, with a tactical (non-ICBM) nuclear weapon, and there were a small number of inhabitants, is that going to be sufficient reason to unleash the entirety of Russia's capability? I have a difficult time believing that, and I suspect the USA military and political forces might well have the same difficulty - and what they believe will play a large part in determining how they in fact strike, should they decide to do so.

The idea of overwhelming deterrence is comforting one, but I'm not convinced it's a realistic one. If that's so, then things are likely going to be more complicated and nuanced than an all-or-nothing scenario envisages.

Posted by: out_there | Jul 27 2021 7:39 utc | 114

Peter AU1@112

and I would note that an all out launch predicated on the USA attempting a first strike via ICBM on Russia is something quite different from the USA using a tactical (non-ICBM) nuclear weapon against China. In the latter case, if Russia is not a military ally of China - and although it seems to be presumed that it is, I am not aware of any conclusive evidence on this point - it is not clear that Russia would undertake such a launch.

Posted by: out_there | Jul 27 2021 7:46 utc | 115

out_there 111 "If there's something I'm unaware of where a military alliance has been declared"

A friend is an ally formal military agreement or not. Russia declared Iran an ally at Jerusalem. Russia has far better relations with China than it does with Iran.

Putin's speech to the Duma, in I think 2018, he stated any attack nuke on an ally, no matter how small would be considered an attack on Russia with all the repercussions that would bring. Some time later, not sure what year it was, a Trump envoy, Russian presidential envoy and an Israeli had a meeting in Jerusalem, the Russian envoy at the presser feeling the need to state Iran was an ally of Russia. Putin's speech was shortly after Trump kicked off building tactical nuke missiles.

re China's nuke numbers. A US interviewer asked Putin about them When Trump regime was crapping on about getting China into arms reduction or limitation treaties and Putin just laughed and said China only had a couple of hundred nukes. China have only stocked enough to act as a deterrent, but now, losses of civilians is quite acceptable to the US. The peasants in the US and most of the west are that brainwashed that they would not rebel if China lobbed in a few nukes before it was annihilated.

Posted by: Peter AU1 | Jul 27 2021 7:53 utc | 116

jinn | Jul 26 2021 23:24 utc | 65

This is the reference I used for the statement about interest rates.

Go down to "Let’s REALLY Dig Deep Down the Rabbit Hole", and it is a few paragraphs further down.

(His....)"warnings about a growing violent divergence in paper versus physical gold and silver prices about how the then just beginning global economic lockdowns had very little to do with protecting the health of billions of citizens, but was based upon enormous under the surface threats to hundreds of trillions of nominal amounts of global interest-rate derivative products that were threatened with complete meltdown by the threat of rising interest rates in the global economy.

The $700 trillion is (admittedly) an upper estimate of a system which is opaque, and almost by definition incalculable. That it is "just" several hundreds of trillions is possibly more accuate.

The nominal total, which is a sum of the linked, daisy-chained, rebundled and resold "derivatives", (There are reputably more versions as well) are ALL seemingly based on the same "collateral". ie. There is not enough of any sort to cover all the bets and derived monetary gambles. Musical chairs with one chair.

(I'm just catching up with the thread so might have more to add later.)

Posted by: Stonebird | Jul 27 2021 8:04 utc | 117

There are various videos of Putin on youtube dating back to the first day he took office as the president of the Russian Federation. He doesn't flap his lips for exercise. In one interview, he said if a fight is inevitable, strike first. For a long time I did not know when he would consider a fight inevitable. The US getting to the stage that it will resort to nukes, no matter tactical nuke or thermo, at that Point Putin considers a fight with the US will be inevitable.
Command and control (US president is CIC) and nuke facilities/launch places will be the targets, though a decent thermo nuke on Washington would eliminate a lot of war making vermin so that's quite likely a target too.

Posted by: Peter AU1 | Jul 27 2021 8:08 utc | 118

Yes, that is what Putin said, but that doesn't make it true. It behooves China to not let the true number out, as that makes targeting much easier in the event of a decapitation strike.

If you look at the "recognized" number of Chinese nuclear weapons you will note they are listing launch vehicles, not warheads. Most of the 300-310 recognized launch vehicles are MIRV...300 launches=1200 plus nuclear warheads.

In any event both Russia and the USA have 5-6 times more then China, so Putin would laugh as it would be silly to suggest China needs to reduce it's nuclear forces.

The peasants in the USA wouldn't so much rebel as it would be dog eat dog in a heavily armed nation. Even if China only landed 200 or 300 warheads, most the country would be without electricity and water for a year or two. All services and society would collapse, the army would splinter, it would be chaos and carnage unlike anything ever seen.

Posted by: J-Dogg | Jul 27 2021 8:16 utc | 119

Peter AU1@116

I understand what you are saying, and I don't want to repeat myself, so suffice to say that I remain unconvinced that "with all the repercussions that would bring" entails a full nuclear strike on whoever attacks (regardless of the size or severity) an ally of Russia. A response, yes; but that particular response, no, I don't see that as necessarily the case.

And to repeat what I've said before: if it's not a full nuclear strike, what then? Is it necessarily going to be a nuclear strike? Again, that doesn't necessarily follow.

Posted by: out_there | Jul 27 2021 8:16 utc | 120

To continue my post ;Stonebird | Jul 27 2021 8:04 utc | 117

I am conflating "Oligarchs" and "Bankers", but at the base what is the difference between the "Rothschild Bank", and the "Rothschild Family"? Or any other Personal-Corporate-Banking setup. (BIS, Fed reserve, et al). At the top are people.

If you don’t understand why perpetual banker narratives that nominal amounts of derivative financial markets are not “real” and that the only risks lie in the face value of these contracts are false, let me quickly explain. Let’s assume a company purchases a derivative product from a bank for a face value of $1M that guarantees the repayment of a $100M loan from a company with a AAA rating of its corporate issued debt. On the surface, this seems like a good arrangement for everyone. The company that lends $100M pays a $1M expense as the cost of doing business to guarantee repayment of a loan 100Xs the size of the insurance it purchase. The banker is willing to take the risk of being on the hook for $100M because the company the banker is guaranteeing repayment of its borrowing is rated AAA and the banker asses the risk is being close to zero.

However, if the company was lying about its financials, which really is not rare these days and actually happened with regularity during the 2008 global financial crisis during which Moodys and Standard and Poors handed out AAA ratings, like candy, to companies that really deserved junk bond ratings, then the risk of this $1M derivative contract is likely to be multiples higher than the banker assessment. If the company, because of their fraud, goes bankrupt after only repaying $2M of the $100M loan, guess who has to step in to repay the remaining unpaid $98M? The bank that entered into the liability side of this derivative product contract. And therefore the risk of this contract becomes $98M, much higher than the cost of the contract. Consequently, I don’t know if the entirety of the hundreds of trillions of nominal amounts of interest rate derivative contracts were bets on continued near zero interest rates, but let’s just say real global economic growth, economic recovery and higher interest rates on March 2020 presented an enormous problem to the global banking cartel that had tied their wealth to ZIRP.

Posted by: Stonebird | Jul 27 2021 8:18 utc | 121

The supreme art of war is to subdue the enemy without fighting.
Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.
To know your Enemy, you must become your Enemy.
Sun Tzu. The art of War.
China has been doing this stuff for about 2200 years. USA about 75 years. Place your bets.

Posted by: Helen | Jul 27 2021 8:34 utc | 122

Tzu, Clausewitz ... Putin. First line of defense is diplomatic. No matter diplomacy or kinetic, its all about understanding the enemy and yourself. US understand neither.

Posted by: Peter AU1 | Jul 27 2021 8:43 utc | 123

out_there 120

Put yourself in China and Russia's shoes. I'm not sure where you are from, but for moist of us in five-eyes, war is something that happens in other countries and if the going gets bad, you can just go home.
With the Japanese invasion, just through the years of WWII, they lost about 25 million but the Japanese invasion of Manchuria state much earlier.
The soviet Union lost about 25 million people to the German invasion.
Both countries could not just call it a loss and go home because it was their home. Both Putin's mother and father nearly died in the siege of Leningrad. His elder brother did die.
Culture is the sum total of history. That history is still within living memory.

Posted by: Peter AU1 | Jul 27 2021 8:53 utc | 124

pogohere | Jul 27 2021 4:50 utc | 98

"Capitalism met Catholicism on Tuesday, as some of the world’s biggest business leaders announced a new partnership with Pope Francis."

This is point number 8 of 16 steps to Fascism. posted by : psychohistorian | Jul 24 2021 23:48 utc | 114 on the "Canada, Victims Of Communism"

Were well on the way, to the only way that will be permitted.

Posted by: Stonebird | Jul 27 2021 9:32 utc | 125


Thank you for the Werner Herzog movie. Loved it. Rich with information and a visual feast.

Posted by: uncle tungsten | Jul 27 2021 9:42 utc | 126

jinn @65: "...who do you imagine is the counter-party that will win that $700 trillion?"

There is no "counter-party". Derivatives are the result of a misunderstanding by Chicago school economists of what "value" truly is. In essence, they got a sign reversed in their calculations. Derivatives, basically, represent negative value, yet they are traded as if they posses actual real value like equities or asset-backed securities.

This would be just a regular scam, a financial "hot potato" that would burn anyone who happened to be holding them when markets realized what they really are and trading of derivatives becomes impossible, but trading dog poop that has been painted gold as if it were gold has been so profitable that $trillions of this poop has been put into circulation and is even held as assets backing currencies.

When derivatives are hit with a shock their value doesn't transfer to another party, and this because they have no value to transfer. Instead they implode into pixie dust that evaporates when sunlight hits it, and that is where the real fear of the derivatives arises. When the music stops and the hot potatoes stop being passed, they aren't just going to burn a couple unfortunates like Greek pensioners, but they are going to "disappear" unknown $trillions in wealth from the global economies (I don't know how many $trillions, but it is a lot... some say several hundreds of $trillions).

Of course, this wealth that is set to evaporate at some point is purely imaginary to begin with and only exists so long as people continue to believe in it. After the 2007-2008 debacle maintaining that belief became a massively herculean task. Those in big finance have to keep trading derivatives like they have value even though they know under that thin layer of paint is just dog poop. Once their faith in the pixie dust falters, then... well, then we are in financial uncharted waters and all bets are off. Derivatives will begin to explode (again!) like financial hand grenades and anyone holding them will be hurtin` for certain, and that happens to be the entire global financial system. I doubt the Fed cranking up the printing presses will help the next time derivatives start to pop.

Posted by: William Gruff | Jul 27 2021 9:51 utc | 127

HelenB #96

Thank you for that information. I gather the world might be surprised at how fast China can switch away from coal. It certainly has been getting the infrastructure in place and that immense Amur Gas Processing Facility that karlof1 #68 linked is one mighty effort. That facility produces liquid helium and natural gas and additional
by-products from the process.

Posted by: uncle tungsten | Jul 27 2021 10:01 utc | 128

Peter AU1@124

I agree with you about the suffering and the courage of both the Russian and Chinese people. From what I have read (Martyanov's first book Losing Military Supremacy was particularly to the point for Russia), their historical experience sets them apart as nations and peoples who understand the seriousness and destructiveness of war.

I'd make note of a couple of points, though.

First, and notwithstanding this historical record of suffering, the Russian and Chinese governments are only recently friendly, and hence, it is a stretch to say that it's obvious that the Russians would put the existence of their nation-state on the line to protect China. If the two had a long history as full military allies, that might be a different matter, but as I've noted, that history does not exist - and, I might add, I am not convinced that they have yet to reach that state of affairs even to this day (and from all I've read, the evidence for this is not conclusive, only suggestive).

Second, I believe it's questionable to say that the Russian government and military would respond with overwhelming force or in a way that might threaten the continued existence of their nation-state, regardless of the severity of the damage done, the attendant circumstances, and other considerations. One thing I've gleaned from reading Glantz, Martyanov, and other writers on Russian military affairs is that Russians are serious, thoughtful and deliberate when it comes to acts of war. Hence, it's not at all obvious what tactics the Russians would adopt, in the absence of knowledge of the circumstances.

Posted by: out_there | Jul 27 2021 10:26 utc | 130

China has immense capacity to collaborate and organise itself for betterment. The USA is simply not in the race.
Consider this documentary on the poverty alleviation program in China: 50 minutes on channel CGTN.

Posted by: uncle tungsten | Jul 27 2021 10:41 utc | 131

..."everyone needs to play by the same rules"...
..."an affirmative vision of the rules-based international order"...

One day the Chinese are going to run out of patience, then turn up to one of these nonsensical meetings and thump down a document and push it across the table to a bunch of smug-faced US "diplomats".

The title of that document?

"A compendium of the rules that make up the rules-based international order".

And when the Americans demand to know what this is all about the Chinese will say "Well, you never write them down, so we've done it for you".

Then they'll get up and walk out.

Or, in short: f**k you, ya' f**wits.

Posted by: Yeah, Right | Jul 27 2021 10:45 utc | 132

Very descriptive! That is a good explanation of derivatives.

Posted by: ArthurDent | Jul 27 2021 10:53 utc | 133

Posted by: d dan | Jul 26 2021 17:29 utc | 9 -- "How to make a coherent, consistent and meaningful foreign policy (and actually any policy) is just beyond me."

Thanks for the observation, which is why I say that the US -- as she is presently configured -- is UNGOVERNABLE.

Which explains why the ever-so-polite (thus-far) Russians call them "non-agreement capable".

With leadership such as she is presently cursed with, the US will remain ungovernable for the next several decades, sadly so for the good American people, but delightfully so for the "leaders" all with their snouts in the trough.

As for the rest of the world (Zone B, as The Saker calls them)? They will learn to disengage from the Indispensable 'Normal Nation' as she swirls around that Exceptional Toilet Bowl.

Quick, don't nobody go and tell Washington that a civilised nation attracts, not "deters" others.

Me-thinks that is something that Wang Yi has in mind when he promised to give Washington a good tutorial on civilised comportment.

Posted by: kiwiklown | Jul 27 2021 11:01 utc | 134

out_there @105

It sounds from your posts more like you are fishing for arguments for how America could get away with a limited "little" nuclear strike on China. An atomic nose-bloodying, so to speak. Everyone knows Americans would go ape-shit insane if any major American city were vaporized because America = exceptional, but China wouldn't end the world just because America blew up say Wuhan, would they? I mean, do even Chinese people know where Wuhan is? We Americans have to use satellite photos just to know what is going on there, right? Who would really miss a place like that!

Trust me on this, the Chinese would not just overlook that limited "little" nuclear strike. You would lose Chicago or San Francisco, and then it is back to MAD, so they might as well hit back hard right from the get-go.

Next point: China is a maximum of six weeks away from having 5,000 1 megaton class nukes and their delivery vehicles at any given time. When China decides they need more nukes they will have more nukes. That, in part, is what the CZ-11 launcher is all about. Sure, it can be used to quickly replace China's BeiDou global positioning system in an emergency, but it can also put nuclear armed hypersonic glide vehicles into orbit that can drop anywhere on the planet. China has more than enough stockpiled fissile material to make as many bombs as they want, and they certainly don't lack the technical or industrial capacity to slap them together at a moment's notice.

Exceptionally retarded Americans need to wrap their empty little heads around the fact that the "End of the World" scenario doesn't start with China's retaliation for an American "limited" nuke strike on China but rather with America's "limited" nuke strike itself. You hit China with a nuke and THAT marks the end of the world.

I realize that Americans feel they need to escalate the violence, particularly after their last bio warfare attack on China backfired so spectacularly, but know that it is your use of nukes that will end the world, not China's retaliation.

Posted by: William Gruff | Jul 27 2021 11:30 utc | 135

It appears the the USA wants another Cold War with China and Russia, but to what end? At least with Russia it is conceivable that once Putin has gone, Russia could integrate with the West. I see no chance of that with China.

China is too big and we rely too much on them for the West to have much leverage. Their economy is equal to the US, the USSRs was about half the size and we did not rely on the USSR like we do China. I just can't see where this is going. War would be absolutely crazy and pointless. It will take decades for the West to cut economic ties with China.

If the US do want to continue this, their behaviour could be their downfall as the conflict will come down to how the World splits between the two sides. Even if the US did win, after many decades of sanctions and false narratives against China, everyone would be poorer. A pyrrhic victory. Are they crazy enough that they want hegemony at all costs? Or do they simply overestimate their own strength and righteousness?

Posted by: Mighty Druken | Jul 27 2021 11:53 utc | 136

Posted by: Mar man | Jul 27 2021 0:41 utc | 73 -- "..... the US is "a Monkey With Hand Grenade".

Love the way Russians have with word pictures.

Of course, the monkey is just as liable to drop the grenade between his own feet (think self-inflicted damage, Afghanistan-style).

Also Russian (I think, either Putin or Lavrov, or both): negotiating with the US is like playing chess with pigeons, cos they strut all over the board, kick over the pieces, shit everywhere, declare victory, then fly away (and worse this time -- leaving in the night without telling their allies).

The US "leadership" is at the stage of devolution where many people in the world is laughing in their faces.

Posted by: kiwiklown | Jul 27 2021 12:22 utc | 137

Posted by: uncle tungsten | Jul 27 2021 1:47 utc | 79

Concerning electrical power, quite apart from their frenetic hydro-power projects you may want to read up on how China has just mastered molten salt reactors, which is a safer way to tap nuclear energy. The original first generation nuclear power plants were meant to also make nuclear bomb material as well. Molten salt reactors to not make bomb quality by-products, and in the event of a breakdown, the molten salt falls into a pit, cools, solidifies, and stops emitting radiation! Cool?

China has just started construction of a pilot plant.

And from what I have learnt following them, what China says they will do, will be done.

Posted by: kiwiklown | Jul 27 2021 12:34 utc | 138

Uncle T, so glad to hear you enjoyed Herzog's Happy People!

All the best, friend!

Posted by: Gordog | Jul 27 2021 12:41 utc | 139

For those of us who are old enough to remember the Japan scare, the hope may be that a similar outcome would result. Recall that there were great fears that Japan was "buying everything", that their economy would exceed that of the US (despite a far smaller population) and so on. There was even a best-selling novel ("Debt of Honor" by Tom Clancy) where Japan secretly makes nuclear weapons and attacks the US following a trade war initiated by the US on dubious grounds (!). Including a sort of cyber attack on the financial system (the novel is a bit silly but it passed with a US audience). On the Japanese side, we had "The Japan That Can Say No: Why Japan Will Be First Among Equals" (1989).

Now Japan is apparently neutered, possesses little in the way of an independent space program, their demographics are taking a toll and so on.

This seems an unlikely outcome for China, as China has already seen how the Plaza Accords and similar financial chicanery were used against Japan's exports (and China is far more effective world-wide as an importer than Japan ever was, due to their large market and willingness (eagerness, in many cases) to adopt NIH technology and to send large large numbers of skilled workers abroad for infrastructure projects).

Posted by: Billb | Jul 27 2021 12:57 utc | 140

pachinko @ 21

If you like to be entertained with youtube videos, then I suggest you look at

Martin Jacques - A Brit academic who has some of the best understanding of China by any Westerner

Kishore Mabubhani - A highly accomplished former Singaporean diplomat of Indian descent who has some very interesting things to say about the China US relationship

Lots of videos by these two gentleman

Posted by: Littlereddot | Jul 27 2021 13:05 utc | 141

Deter, this word is interesting...

Its very use denotes they want to discourage and/or deny access to something they feel they already have possession of.

And 'they', are 5000 miles from home.

'nuff said

Posted by: A.L. | Jul 27 2021 13:11 utc | 142

The recent stimuli packages in the US have been basically spent on goods manufactured in China. For all the talk of the US and China getting into a conflict - Americans don't manufacture anything and like the rest of the world get it from China. This won't change. No US administration is going to repatriate manufacturing and contract societal wage disparity back to the 1970's. China has expertly used globalisation and consumerism to its advantage. The US had a good run and it's elites moved as much wealth upwards as possible in 2008 and again during the pandemic. The economic model of the US is incompatible with war with China, consumerism is incompatible with war with China.That doesn't mean the ever grift in the beltway and mic can't continue - they just have to keep the pot boiling.

Posted by: Reggie | Jul 27 2021 13:17 utc | 143

William Gruff @ 135

Well said.

I noticed in one of the statements by some Chinese defence official some weeks ago when the were announcing that they would be ramping up their nuclear deterrence that they presently have 200 or 300 or so commissioned warheads. That word "commissioned" stood out to me. I surmise that they have already prepare the parts for many more warheads and only need a short time to get them operational.

I also think that the previous policy of keeping only such a small number of warheads was to purposely present as little as a threat as possible. This would keep the US and Russia focused on each other and not on China, allowing it to concentrate on building up its economy.

This triangular relationship between powers is not new to China. There was a period of Chinese history called the Three Kingdoms Period. As the name suggests it was time of incessant war and competition between three rival kingdoms. If one of them became too powerful, the other two would gang up on it. This is immortalised in the classic Chinese literary historical novel called The Romance of the Three Kingdoms.

In anycase, if the history of the Three Kingdoms holds true, should China rise to become too powerful, Russia would naturally start to side with the US to keep China honest. I for one don't see this as a bad thing.

Posted by: Littlereddot | Jul 27 2021 13:22 utc | 144

Roger @ 104:

Yes! You nailed it in every respect!

'Development party-state' is the perfect word for the CPC system.

They have literally an army of specialists that plan and guide every single project and mega-project. And they're always learning and refining their techniques.

You just don't build up such huge industry and dozens of glittering metropolises by relying on some 'invisible hand' [which usually brings invisible results, lol]

Their aerospace progress has been remarkable. Mao laid the foundations of course, and China was among the first countries to launch a satellite, back around 1970, before Britain accomplished the feat!

By the 1990s, they acquried manned space technology from Russia, and launched their first astronaut into space by 2003. And look at them now, with their own space station, launched on their own rockets and own advanced engines---something the US is unable to do.

I agree with you fully that Russia is basically a neoliberal economy. Putin did a great job stabilizing the country, and rescuing some of the crucial sectors, including military-industrial, energy [including nuclear] etc.

But there is certainly no active development plan in place, along CPC lines.

I look at this the same way one would approach an engineering project. You have to first design, then build, then refine and perfect etc. All of that takes a serious PLAN!

You can't just make some kind of legislation, or subsidies and such. That's just fiddling around the edges.

I think the Russian people want to go back to a more Soviet-style system. I think at this point Putin's fiddling around the edges has proved inadequate and needs to be overhauled completely.

China is showing exactly how it's done, and there is no reason that system can't be copied by any country.

You need to start by having a large PLANNING apparatus, basically an army of educated specialists, designers, builders---that are going to look at any given sector and then say, here's what we want this to look like in five years!

And then just do it!

Posted by: Gordog | Jul 27 2021 13:24 utc | 145

stonebird wrote:
The nominal total, which is a sum of the linked, daisy-chained, rebundled and resold "derivatives", (There are reputably more versions as well) are ALL seemingly based on the same "collateral". ie. There is not enough of any sort to cover all the bets and derived monetary gambles. Musical chairs with one chair.

What has any of that got to do with interest rates or the oligarchs or any other part of the ridiculous claim you made? Your article provides zero evidence for the claim that interest rates are being held low for the benefit of oligarchs. It would be much closer to the truth to say if interest rates went up the oligarchs would be laughing all the way to the bank.
Here is some of the nonsense from the article you linked to:

" If the company, because of their fraud, goes bankrupt after only repaying $2M of the $100M loan, guess who has to step in to repay the remaining unpaid $98M? The bank that entered into the liability side of this derivative product contract. And therefore the risk of this contract becomes $98M, much higher than the cost of the contract. Consequently, I don’t know if the entirety of the hundreds of trillions of nominal amounts of interest rate derivative contracts were bets on continued near zero interest rates, but let’s just say real global economic growth, economic recovery and higher interest rates on March 2020 presented an enormous problem to the global banking cartel that had tied their wealth to ZIRP."

Sentence 1 & 2 contains an example of a derivative trade that has nothing to do with interest rates going up or down.
Sentence 3 claims to be a consequence of the first 2 sentences but its just gobledeegook that makes up numbers about interest rate derivative contracts and who might benefit from low interest rates.
There is absolutely zero evidence in the article that the oligarchs are going to be hurt by higher interest rates.

Posted by: jinn | Jul 27 2021 13:27 utc | 146

Gruff @127 wrote:

There is no "counter-party". Derivatives are the result of a misunderstanding by Chicago school economists of what "value" truly is. In essence, they got a sign reversed in their calculations. Derivatives, basically, represent negative value, yet they are traded as if they posses actual real value like equities or asset-backed securities.
....When derivatives are hit with a shock their value doesn't transfer to another party, and this because they have no value to transfer. Instead they implode into pixie dust that evaporates when sunlight hits it...
HA HA HA I'm sure a court of law would be greatly amused by your explanation of contracts.

Posted by: jinn | Jul 27 2021 13:39 utc | 147

Stonebird | Jul 27 2021 8:18 utc | 121 et al

Glad you bring up "derivatives". Here's my take.

The banker is willing to take the risk of being on the hook for $100M because..."

The use of the word "derivatives" is just part of the trickery and flim-flam used to obscure understanding. I.e., it has only generalized definition that might infer many possible meanings, but in fact is not sufficiently defined, and thus can contain no certainty [The opposite of Scientific Method, which promotes certainty].

For example, while generally a "derivative" it is a bet on a legally separate-but-real "thing" that may have legal and clear definition [you and I bet $100 on who wins the World Series], a derivative contract only infers that the bettors have enough real substance to deliver the betting amount.

The "trickery" is often in the details, in which what seems real is only inferred and has no substance. The banker bet the bank's money, not his own.

Recall "The banker is willing to take the risk"...see the inference that "the banker" takes the risk? That is flim-flam and has no real substance. It is the banker's bank that must deliver on the bet. The banker gets rewarded for the making the low-risk deal...the bank fails if IT cannot deliver...the banker has likely already made his gazillions before the bank collapses and he lives happily ever after... In shame? What shame?

The bank itself knows no shame; it has no is like the gravel or asphalt that your car grinds on.

Want to get scientific about it? Brooksley Born* got scientific and spotted the flim-flam and understood that "derivatives" contracts were often high-risk to high-risk that even the was at-risk of being forced to devalue the USDollar...and even foreign .govs were at risk!.

* Brooksley Born was chairman of the the federal agency which oversees the futures and commodity options markets. In 1999 she was forced-out of her .gov job for spotting the fraud in "derivatives". And here we are!

Posted by: chu teh | Jul 27 2021 14:03 utc | 148

Roger and Gordog,
Good points about Russia.
I highly recommend Tony Wood's book, Russia Without Putin. Don't be misled by the title. This is not another liberal fantasy about Putin the evil puppet master. It uses Marxist theory to understand the specific form of capitalism which emerged in Russia and says that Putin has merely consolidated that system, with a few exceptions, including selective centralization of control over a few resource industries and selective disciplining of some oligarchs. This is far from the liberal accusation of re-Sovietization (eg. by US asshole diplomat Michael McFaul). And it is far from the institutionalist view of Russia as an anti-neoliberal, neo-development state.

As you point out, the key differences with China include a lack meaningful planning and a dedication to moving Russia up the value chain in terms of manufacturing and processing resources. Russia's class structure is very unequal, its taxation and social policy systems have been damaged by neoliberalism, and it completely failed to follow China on pandemic prevention. Its neoliberal system set it up for that failure, and it looks much more like the US.

Russia won't overcome these structural problems under Putinism, and the next generation of neoliberals will make them worse.

Only a socialist party state can get this done. But there is no prospect of that happening in Russia atm.

This is depressing, as future human development progress, and strategic stability and peace, require a socialist Russia working closely with China.

Posted by: Prof | Jul 27 2021 14:17 utc | 149

Yeah, Right | Jul 27 2021 10:45 utc | 132 et al

Great work, Stonebird. Magnificient perspective!

Hey...that's what Brooksley Born did with"derivatives" contracts:

The title of her document?

"A compendium of the rules that make up "rules-based derivatives".

And when Rubin, Summers, Levitt, Greenspan, and Clinton-family bosses asked "what is this?", she explained "Well, you never write them down, so I've done it for you".

They fired her!.

Then they'll get up and walk out.

Posted by: chu teh | Jul 27 2021 14:22 utc | 150

Should be:
Then they got up and walked out.

Posted by: chu teh | Jul 27 2021 14:24 utc | 151

Lots of fear-mongering about China.

Thucydides Trap implies that the established power is the belligerent one.


Posted by: Jackrabbit | Jul 27 2021 14:36 utc | 152

Re: The unholy alliance between Capitalists & the Pope

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."

- Frederic Bastiat


Posted by: Jackrabbit | Jul 27 2021 14:46 utc | 153

Posted by: Prof | Jul 27 2021 14:17 utc | 149

Thank you for your comment, very astute. I want to say a few things in Putin's defense:

I think Putin's first concern was to keep Russia "safe", and that explains what he has chosen to emphasize up to now, i.e. fending off the vultures in the West. China might not be so friendly if Russia were not so strong, too. Uncle Sugar might have gotten a lot more hostile a lot sooner had Putin tried to go Commie. The neolib camoflage has bought time.

All those resources WILL have to be defended.

What Putin does going forward will be the tell. Who he picks to succeed him, whether he neglects that task.

Posted by: Bemildred | Jul 27 2021 14:48 utc | 154

Lighthizer is living in a parallel universe:

America Shouldn’t Compete Against China With One Arm Tied Behind Its Back

As if this capitulation to China is not enough, the trade amendment would also effectively surrender sovereignty over our own trade policy to the World Trade Organization by permanently weakening Section 301 unless the United States first wins a multiyear litigation before that body.

So, the WTO is also an enemy of the USA now?

So much for this so-called "rules-based international order".

Posted by: vk | Jul 27 2021 15:02 utc | 155

Prof@149 is right, of course. Putin is a total Yeltsinite with better PR. The only thing he's done is crush the oligarchs with political ambition and done some military reforms, nothing more. His cultists are his shield against criticism, and if you remove them, you discover there is absolutely nothing special about him.

Posted by: Biswapriya Purkayast | Jul 27 2021 15:17 utc | 156

@ J-Dogg | Jul 27 2021 4:53 utc | 99

I have family and friends in a near by city (Portland) whom I am trying to convince to make nuclear evacuation preparations. Within 1 hour of any nuclear weapon use, they need to be on the road, packed with food and firearms to my secluded house in the mountains.

I advocate precisely the opposite approach. Know in advance where the bombs are most likely to fall; then, when the strike is imminent, get as close to Ground Zero as possible. Better to be vaporized instantly than to suffer horribly for hours, days, or weeks. There will be no safe places--none.

Posted by: corvo | Jul 27 2021 15:40 utc | 157

@ Biswapriya Purkayast | Jul 27 2021 15:17 utc | 156... we can agree to disagree then!

@ Posted by: Jackrabbit | Jul 27 2021 14:46 utc | 153... very good quote from Frederic Bastiat.. here is a link to more of his work for anyone interested..

Posted by: james | Jul 27 2021 15:40 utc | 158

@ many

The concept of tactical nukes doesn't work:

1) for starters, they would not be any more effective militarily than conventional missiles that exist today;

2) any weapons system that can delivers such mini-nukes could also deliver "normal-sized" nukes;

3) because of #2, the target nation wouldn't be able to know if the missile system is nuclear or not; the only way to behave would be to assume every missile system is nuclear;

4) because of #4, we would have the paradoxical outcome where tactical nukes would make MAD easier, not harder, to happen, as no country has the equivalent system aimed at the USA, so it would to escalate directly to a full-fledged nuclear attack.

Posted by: vk | Jul 27 2021 15:50 utc | 159

@ 117 / 121 stonebird... thanks for the comments and link... fact is the derivative markets are a total scam... everyone knows this.. warren buffett refers to them as weapons of mass destruction... and of course the rating agencies are in on the game too - an integral part of the system in fact.. it will be over when it is over, but not til it is over... the powers that be will continue to try to make it work indefinitely... to quote what jackrabbit quoted again -

"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."

- Frederic Bastiat

Posted by: james | Jul 27 2021 15:54 utc | 160

About financial derivatives:

Here is info right from the BIS.

By their reckoning, intetest-rate bets make up by far the biggest part, about 500 trillion.

It could in fact be much more, since derivatives are completely unregulated 'over-the-counter' trades among the financial parasites.

Some have put the total number at 2,500 trillion, five times the amount stated here. Buffet has called derivatives financial 'WMDs.'

The entire US so-called economy is financialized---which means it is a funhouse of mirrors with no connection to reality, much like their media propaganda.

Ever since the 2008 meltdown, we've had zero interest base. Some predicted this years before, since simple exponential math tells you that an economy expanding in perpetuity by means of money created as debt, with interest attached, is the same math as a Ponzi Scheme.

Every year you need to create even more money, just to cover the interest from the previous year. That means you need more borrowers each year, since new money can only come into being as a LOAN by a bank.

The Ponzi scheme is simply the mirror image: every year you need more NEW investors, to pay off dividends to the previous year's investors.

Both are based on the math of exponential growth, which starts off slow and then starts shooting skyward in an unsustainable near-vertical climb.

A number of economists, including Michael Hudson predicted the coming of ZIRP, years before the event. There was no other choice, the creation of new interest obligations was simply not possible---any more than it was possible for Madoff to reel in new investors.

We've had ZIRP now for more than a decade. Of course, the financial parasites never let a good crisis go to waste. So instead of that zero-interest money being put to work to build infrastructure and production, it was merely funnelled into the equities markets, which meant a huge wealth transfer to the investor class.

Ie, a big fat illusion. Created with monopoly money and blowing up a big fat bubble.

That's why you now have five hundred trillion in interest-rate bets. The insiders know that it's impossible to return to money creation with interest attached.

But financial parasites being the greedy buggers they are have found a way to shoot themselves in both feet.

And that's where the so-called 'repurchase' or repo market comes in. This is another unregulated trading scheme which is basically a pawn shop for the gamblers. They come here to get instant cash for paper, usually T-bills, and usually so they can cover any unexpected gambling setbacks.

Now this wheeling and dealing can and does move interest rates, whether the central banks like it or not!

If the holders of cash, who are the buyers of the paper decide the paper is overpriced, then the underlying interest goes up, as the paper price goes down. That's just simple arithmetic.

Coincidentally or not, we had a very big crisis of exactly this sort in the repo market in 2019---just months before covid hit.

The Fed and other central banks stepped in with huge bales of cash to 'stabilize' the situation and keep those T-bill and related paper prices from flooring---and effective interest rates from shooting up.

That repo crisis was well covered in the media, and the sums of money injected by the central banks was in the hundreds of billions.

Why the panic? [According to some observers, the BIS was in meltdown mode].

Because of the massive derivatives bets on interest rates!

Simply put, an interest rate rise triggered in the repo markets would set off the derivatives neutron bomb! One observer called it a plane crash where everyone dies!

This is because it would result in a banking collapse and no liquidity!

No money could reach any counterparty in any trade or contractual agreement. In short, the implosion of the Ponzi house of cards. [Which is of course mathematically inevitable anyway.]

Now, an interesting theory has been put forth that the covid economic lockdowns were put in just to deflate the economy and kill demand for credit.

This being the only way to control the runaway interest train that started in the repo markets, and could not be reined in by central bank intervention.

So the Ponzi collapse may well have already happened. The lockdowns and brakes on the economy that go with that are just an attempt to glide the engine-less plane, and hopefully set it down in some farm field, without a total breakup.

Over a year ago, the financial analyst Andrea Cecchi posited this theory---and rightly predicted everything we have seen over the past year---recurring lockdowns, new strains, etc.

In short, the covid emergency will be used as long as required to keep the plane from crashing.

This requires no conspiracy theory to be true. The virus is real and in some cases deadly---just that the economic shutdowns are not medically required, nor even useful.

It is a little white lie on the order of mom telling you not to play in dirt, because you'll catch a horrible disease. Where the real reason is she wants the kids clothes to be clean at least until dinner time!

Considering the opacity of the ruling elites, and especially the finance sector, we could well already be in emergency meltdown mode for over a year!

The Right Virus at the Right Time

Posted by: Gordog | Jul 27 2021 16:04 utc | 161

@ 161 gordog.. thanks.... some of this, or much of this was covered in @ 117 stonebirds link.... i will take a look at your link at bottom..great overview.. thank you!

Posted by: james | Jul 27 2021 16:10 utc | 162

jinn | Jul 26 2021 23:24 utc | 65
@stonebird and VK

This author estimates the assets of the shadow banking system to be ~ 200 trillion in a July 2021 essay:

The vast “shadow banking” system, which has grown out of the same flawed monetary thinking, is another matter. Comprising pension funds, hedge funds, insurance companies and other investment vehicles, it now manages a $200 trillion stock of assets, dwarfing that $2 trillion cryptocurrency valuation, and also vastly exceeding the annual income (or GDP) of the world as a whole, estimated at $86 trillion. Being in the shadows, then, no longer means being on the margins. Central bankers have permitted and sometimes encouraged this sector to expand beyond the regulatory frameworks of governments. But the real roots are deeper, lying in the great structural shift of pension privatisation. Between 1981 and 2014, 30 countries fully or partially privatised their public mandatory pensions. Coupled with cross-border capital mobility, the move to private retirement savings steadily generated vast cash pools for institutional investors.

Today one asset management firm, BlackRock, manages in excess of $8 trillion of the world’s savings. Such companies have outgrown the capacity of “main street” banks to provide services. No traditional commercial bank could absorb these sums; few governments are willing to guarantee individual accounts of more than $100,000. The new form of “banking” answered the need to accommodate the enormous sums of globalised capital.

Like pawnbrokers, who practised an earlier form of unregulated credit, shadow banks exchange the savings they hold for collateral. But instead of watches and wedding rings, they lend out on the strength of government bonds and other securities.
Replete with cash, they can provide “liquidity” on a vast scale to businesses or investors who need it. In return, the borrowers offer up a security—and write an IOU offering to repurchase it later, at a higher price. This markup is, in effect, the interest on the loan. These repurchase deals are struck in the “repo” markets which form the heart of the shadow banking system.

Note that this whole system avoids reliance on the social construct of credit, upheld by trust and enforced by law, which traditional banks had to work within. Instead, the system is one of deregulated exchange in which cash is simply one more commodity—no more regulated than any other.

Securities are swapped for cash over alarmingly short periods: through economic history, such churning trades have often been a sign of speculative frenzy overpowering sober judgment. Moreover, operators in the system have the legal right to re-use a security to leverage additional borrowing. This is akin to raising money by re-mortgaging the same property several times over. Like the banks, they are effectively creating money (or shadow money, if you like), but they are doing so without any obligation to comply with the old rules and regulations that commercial banks have to follow.

So we have power without responsibility, but—worse—we have parasitical power.

This shadow money is what some term “fictional capital.” When the bubble collapses again there will be little to nothing there for small investors due the legal superstructure erected by the global oligarchy who will then predate on the social ruins — calamity bargains. They may meet with proverbial pitch forks if the regime’s extreme inequality extends beyond a point where it can no longer be managed through ideological indoctrination. (see Thomas Piketty’s account of inequality regimes throughout history, the first part of his last book).

Posted by: suzan | Jul 27 2021 16:10 utc | 163

@Posted by: Prof | Jul 27 2021 14:17 utc | 149

I have read Tony Wood's book, Russia Without Putin. Agreed, an excellent take on the reality of the Russian situation.

@Posted by: Peter AU1 | Jul 27 2021 7:06 utc | 110

When you take into account the nuclear winter effects, any attack of more than 50-100 sizeable nukes becomes a murder-suicide of the whole of human civilization (and possibly humans themselves). 300+ is more than enough to end civilization, MAD indeed! Just watch the movie "The Road" for what a nuclear winter would be like.

"The surprising finding”, says Jägermeyr, “is that even a small-war scenario has devastating global repercussions”. e.g. even a small nuclear exchange between India and Pakistan using Hiroshima-sized nukes (way smaller than the 1 megaton plus nukes on US/USSR/Chinese missiles).

We've know this since the 1980s:

Posted by: Roger | Jul 27 2021 16:11 utc | 164

Quite a productive thread with far too many comments to reply to. So, on to today's developments. Today's Global Times editorial is even stronger than yesterday's. This was the gist of yesterday's:

"Xie's expression of strong dissatisfaction with the US, as seen in a briefing of the Chinese Foreign Ministry, drew praise on the internet. Xie sharply criticized the US' 'competitive, collaborative and adversarial rhetoric,' in which 'the real emphasis is on the adversarial aspect, as the collaborative aspect is just an expediency, and the competitive aspect is a narrative trap.' He said the US wants to 'do bad things and get good results.' 'How is that ever possible?' asked Xie. He then continued by criticizing the US' arrogant approach in dealing with other countries 'from a position of strength.' Xie even called the US the 'inventor, and patent and intellectual property owner' of coercive diplomacy."

Our editor then tells us there was a time when such news was withheld from the Chinese public:

"In the past, China had stressed on creating a good atmosphere for China-US talks. Even if the two sides had very heated discussions, China might not inform the public about such talks. This time, China quickly made public Xie's tough statement at the Tianjin talks. This has solidified an important posture adjustment in China's approach to dealing with the US that began with the Anchorage talks: We will no longer make unilateral efforts to maintain the public opinion atmosphere in China-US relations."

In other words, Chinese nationalism will be stoked:

"The basis for such changes is that Chinese society has become fed up with the bossy US and we hold no more illusion that China and the US would substantially improve ties in the foreseeable future. The Chinese public strongly supports the government to safeguard national dignity in its ties with the US and firmly push back the various provocations from the US. In the face of the malicious China containment and confrontational policy adopted by the two recent US administrations, the Chinese people are willing to form a united front, together bear the consequences of not yielding to the US, and win for the country's future through struggles.

"In other words, Chinese society would unconditionally support whatever tough counterattacks the Chinese government would launch in the face of US-initiated conflicts in all directions toward China. The US should abandon forever the idea of changing China's system and policies through sanctions, containment and intimidation." [All emphasis mine]

And if all that hasn't convinced you, then the conclusion ought to remove all doubts:

"For the Chinese people, we want to say that we should not take Xie's words as venting our anger. What Xie said is also a warning that China-US relations are likely to fall in the long run. China must accelerate the building of its comprehensive strength and prepare for the worst-case scenario of escalating confrontation with the US and its main allies. The US wants to use strategic containment to crush China, and we must use continuous development and strength building to crush the US' will. Development is China's most important source of strength. We must make the American people more and more aware of how stupid they are to forcibly shape China into a strategic opponent. [My Emphasis]

The last emphasized sentence is problematic since "the American people" have zero control over the Outlaw US Empire's policy moves at this time. That might change IF Chinese entertainment platforms are allowed to be viewed within the Empire. Yes, China has its own version of Hollywood as this article reveals. Here's the lead:

"Chinese Korean War epic The Battle at Lake Changjin has the potential to save a sluggish summer season in China and is 'likely' to beat record-setting action film Wolf Warrior 2, Chinese film observers said on Tuesday."

Both are designed to pump-up Chinese nationalism:

"The Battle at Lake Changjin depicts the sacrifices and heroism of Chinese soldiers during the Korean War (1950-53), or War to Resist US Aggression and Aid Korea. It shows how brave soldiers from the Chinese People’s Volunteer Army overcame difficulties to push US military forces into a retreat."

I'd say that sure is a timely film and likely planned during Trump's Trade War. Also, many Imperial pundits have begun terming China's diplomatic method as Wolf Warrior Diplomacy after the very successful first episode of that franchise.

The Russia/China symbiotic relationship pairs two giants in the midst of development needing to overcome the attempt by the Outlaw US Empire to strangle their efforts. So far, those attempts have only created further resolve and deepened the cooperation and enhanced the quality of their relationship. The Outlaw US Empire and its NATO vassals don't have anywhere near the capacity to defeat either as they'll need to be treated as one since that's how Russia/China will approach any confrontation. Some of the vassals know that, but too many are captured by the Empire's Dark Side and can't see beyond their noses. Somehow, Anglo arrogance must be diluted for as the Chinese have said, no one, no nation is exceptional--ever.

Posted by: karlof1 | Jul 27 2021 16:23 utc | 165

@ chu teh | Jul 27 2021 14:03 utc | 148

It is the banker's bank that must deliver on the bet. The banker gets rewarded for the making the low-risk deal...the bank fails if IT cannot deliver...the banker has likely already made his gazillions before the bank collapses...

Exactly. Bill Black continuously makes this point. The bankers win even as their ruin the banks. See his interviews with Paul jay at the analysis dot news.

Posted by: suzan | Jul 27 2021 16:28 utc | 166

@ Posted by: suzan | Jul 27 2021 16:10 utc | 163

Shadow banking is different from derivatives. Derivatives are perfectly legal (even praised by the bourgeois economists and "experts"). Shadow banking is just an umbrella term to designate all the illegal financial system.

And yes, the big banks operate in both spheres; they all have a "shadow" part and the legal/normal part. Shadow banking is not some sinister clandestine network of offices underground that are usually depicted in Hollywood movies - they're merely another floor in a big bank's building.

Posted by: vk | Jul 27 2021 16:37 utc | 167

Re: nuclear weapons

Even if the US successfully launches a nuclear first strike and decapitates the Russian leadership the US will still be destroyed:

Dead Hand (Russian: Система «Периметр», Systema "Perimetr", lit. "Perimeter" System, with the GRAU Index 15E601, Cyrillic: 15Э601),[1] also known as Perimeter,[2] is a Cold War-era automatic nuclear weapons-control system (similar in concept to the American AN/DRC-8 Emergency Rocket Communications System) that was used by the Soviet Union.[3] The system remains in use in the post-Soviet Russian Federation.[4][5]

An example of fail-deadly and mutual assured destruction deterrence, it can automatically trigger the launch of the Russian intercontinental ballistic missiles (ICBMs) by sending a pre-entered highest-authority order from the General Staff of the Armed Forces, Strategic Missile Force Management to command posts and individual silos if a nuclear strike is detected by seismic, light, radioactivity, and pressure sensors even with the commanding elements fully destroyed.

By most accounts, it is normally switched off and is supposed to be activated during times of crisis; however, it is said to remain fully functional and able to serve its purpose whenever it may be needed.[6]

Dead Hand

As Putin said in an interview recently, even if they had sunk the HMS Defender it would not have started WWIII as they know they will lose.

Posted by: Down South | Jul 27 2021 16:42 utc | 168

“Talent hits a target no one else can hit; Genius hits a target no one else can see.”
– Arthur Schopenhauer

The difference is that geniuses create. Our Universe is full of mysteries to be unlocked. The Empire is in for a big surprise!

The challenge of our time is that we have so much intelligence but so little wisdom & courage.

What is your target 🎯?

Posted by: Max | Jul 27 2021 16:43 utc | 169

b. ask:

How long then will it take until the U.S. recognizes that and steps down from its illusion of supremacy?

The link provided by Bemildred | Jul 27 2021 16:10 utc | 153

#153 is part of the answer.

Not so long-term

Posted by: Rêver | Jul 27 2021 16:44 utc | 170

Prof, thanks for your excellent contribution @ 149!

And also the book pointer...sounds like a solid read!

I'm hopeful that a return to a socialist Russia is not out of reach. I've had the good fortune to travel to the country and meet people and make friends.

I have a sense that not many are invested in the 'free' market ideology---and that many more would prefer a return to socialism. Or at least a partial socialism as in China.

This is actually the case across much of Eastern Europe. Many embarassing polls over the years showing high numbers of people 'pining' for socialism, including eastern Germany, especially.

I think people want social justice and fair play. And I think the peoples of eastern Europe are deeply disillusioned with the flim-flam they have been sold!

Posted by: Gordog | Jul 27 2021 16:59 utc | 171

Here is info right from the BIS.
By their reckoning, intetest-rate bets make up by far the biggest part, about 500 trillion.

Sorry but that is not correct. $466 trillion reported by BIS is the notional value of the interest rate bets. The notional value is the total principal upon which the interest is calculated.
Ivestopedia explains it like this:

"The notional principal amount, in an interest rate swap, is the predetermined dollar amounts, or principal, on which the exchanged interest payments are based. The notional principal never changes hands in the transaction, which is why it is considered notional, or theoretical. Neither party pays nor receives the notional principal amount at any time; only interest rate payments change hands. "
According to the BIS statistics the actual amount of interest rate bets in the entire planet is only $11 trillion. That is the maximum amount that might change hands if every bet lost.

Even at $11 trillion that is a lot of money, but I'm still looking for some evidence that the oligarchs are going to lose money on any of these bets if interest rates go up.

Posted by: jinn | Jul 27 2021 17:26 utc | 172

@ Posted by: jinn | Jul 27 2021 17:26 utc | 172

Those are the numbers for debt.

Last time I checked (many years ago), derivatives were at USD 60 trillion or so.

Posted by: vk | Jul 27 2021 17:38 utc | 173

James, thanks for the heads-up to Stonebird's excellent comment @ 117!

I hadn't seen that before I started composing my own comment about the same subject---the link between covid lockdowns and the derivatives time bomb!

There is a slight, but significant difference. The excellent analysis linked to by Stonebird, assumes that the only risk is to the bankers and their gambles made on interest rates.

This may be an overly optimistic view. A derivatives implosion set off by rising interest rates will not just hurt the pocketbooks of the parasites, but could result in a complete monetary collapse!

What that means is the economy totally STOPS! A giant '404' for everyone seeking to buy or sell anything!

The foundations of the system may already have buckled. The Stonebird link tells us the worst may pass by 2023, when some of those intetest rate bets will have matured. [And the covid shutdowns eased.]

But this may not be what's going on. The engines of the financial 'airplane' may already have seized!

Our best bet may just be that deadstick landing in a farmer's field! And hope for the best!

Posted by: Gordog | Jul 27 2021 17:50 utc | 174

@ jinn | Jul 27 2021 17:26 utc | 172

I looked up the figures as well at the BIS site. One could also mention that the trend is upward, from 8.8 trillion US dollars in 2019 to 11.7 trillion in 2020.

Posted by: suzan | Jul 27 2021 17:58 utc | 175

@ 174 gordog... i liked the link you shared better in fact! i find gold bugs and bitcoin nuts- and that is how i read stonebirds @ 117 link- a bit too preoccupied to form a truly objective viewpoint.. i tend to see it much like you, except i don't believe their is going to be any smooth landing.. i think what we have will muddle along until it doesn't... at that point i have a much more cynical outlook....i was walking in the forest this morning... all of this stuff people dwell on is man made- all of the finances - man made.. it is bound to collapse at some point to be replaced with something else... i am not sure if people who always seek power, will ever learn to get beyond their predator nature and learn how to live with others... i would like to be optimistic, but it seems the predators, or parasites have a gene that prevents that from having a compassion... i hope i am wrong!

Posted by: james | Jul 27 2021 18:02 utc | 176

@ 172: and where is that 'notional' amount of 460 trillion?

The entire, total amount of global debt is estimated at half that amount, 281 trillion.

Maybe 'investopedia' knows where the difference is stashed.

Look, neither you nor I nor anyone outside of Larry Fink's inner circle knows what's actually going fact YOU, in partucular, least of all--- judging by your 'contributions' here.

Posted by: Gordog | Jul 27 2021 18:10 utc | 177

sorry the link was not added to my comment

Posted by: Irwin | Jul 27 2021 18:13 utc | 178

welp - that link that gordog seems to be written by a gold bug as well, lol... can't get away from these gold - crypo currency people, lol..

Posted by: james | Jul 27 2021 18:17 utc | 179

Posted by: William Gruff | Jul 26 2021 21:58 utc | 55

...otherwise the millions of murders they've committed and the appalling suffering they are inflicting around the world to remake the world in America's image not only becomes meaningless, but becomes the most horrific evil ever committed by any nation...
...If Americans let their delusions of exceptionality go then over a century (or two!) of the most heinous and unpardonable crimes against humanity will come crashing down on them.

I totally agree. This is what makes the imperial marketers' job so much easier. It goes beyond the simple pitch of shiny cities on a hill, which, in itself is a mighty good sell. After all, if you are looking to rally folks around an inherently belligerent concept, claiming "they hate us because of our freedom" will get more traction than "they hate us because we're assholes".

What you are describing is a moral investment in the established narrative. Your average citizen, bless his heart, has completely surrendered any personal involvement in all things pertaining to war or foreign policy. He has entrusted the executive with full, albeit tacit support in its adventurism and nation smashing. In exchange, our golden prince receives heaps of praise for his awesomeness and he can indulge in piles of short lived consumer goods. However, this transaction has also sealed his fate to that of the belligerent. An obvious example is the war against Afghanistan and Iraq. Twenty years on, our citizen cannot honestly expect to distance himself from the whole operation. In a mystery novel, he's the murderer's alibi. He provided the shovel and drove the car.

In other words, our citizen will most likely reject any threat to his narrative. His immediate instinct will be to ask "does this introspection make my butt look fat?"

Posted by: robin | Jul 27 2021 18:22 utc | 180

At his VK Space, Pepe Escobar has translated this long article related to Sherman's visit: "Pujiang Wang Yi makes clear China's 'three bottom lines' on China-U.S. relations." Pepe describes it thusly:


"I received this BRUTAL analysis by a Chinese think tank of the latest US-China "talks". I revised the translation, kept the original spirit, and I'm showing here some of the highlights. You will NEVER read anything remotely similar on Western media. This is how the new Chinese diplomatic counter-offensive is being interpreted at the highest level. Will use it in my next no holds barred column."

Much of the "flavor" of the article is reflected in the Global Times editorial I linked to and commented upon @165. Here's the opening paragraph:

"U.S. Deputy Secretary of State John Sherman concluded talks in Tianjin on Monday without getting the desired results on her trip, which she should have expected when she visited, because China had already made it clear that the deterioration of China-U.S. relations to the current level was caused by the U.S. side. It would be impossible for Washington not to fundamentally change its judgment and stance on China and to try to come to China as a lobbyist and 'teacher'."

Most people have Microsoft Edge which has its own translator, so I won't copy/paste the 19 paragraphs Pepe provides or the article's 25 unless requested to do so, although I will copy/paste the Three Main Points Wang Yi provided that graphicly spells out China's positions:

"First, the United States must not challenge, denigrate or even attempt to subvert the socialist road and system with Chinese characteristics. China's roads and systems are the choice of history and the choice of the people, the long-term well-being of 1.4 billion Chinese people, the future and destiny of the Chinese nation, and the core interests that China must uphold.

"Second, the United States must not try to obstruct or even interrupt China's development process. Chinese people certainly have the right to a better life, China also has the right to realize modernization, modernization is not the exclusive right of the United States, which involves the basic conscience of mankind and international justice. China urges the U.S. side to lift all unilateral sanctions, high tariffs, long-arm jurisdiction and technology blockades imposed on China as soon as possible.

"Third, the United States must not infringe on China's national sovereignty, let alone China's territorial integrity. The issues of border-related, Tibet-related and Hong Kong-related issues have never been human rights or democratic issues, but rather the major problems of anti-"territory independence", anti-Tibet independence and anti-Hong Kong independence, and no country will allow the sovereignty and security of the country to be compromised. As for the Taiwan issue, it is even more important. Although the two sides have not yet been reunifies, the basic fact that the mainland and Taiwan belong to the same China and Taiwan is part of China's territory has never changed and will not change. If "Taiwan independence" dares to provoke, China has the right to stop it by any means it needs. We advise the U.S. side to keep its commitments and exercise caution on the Taiwan issue.

"These three bottom lines, clearly the Chinese government's fundamental position and attitude in the relationship with the United States, these three bottom lines, related to the basic principles of the Charter of the United Nations and the basic norms of international relations, these three bottom lines, directly related to China's internal affairs, related to national sovereignty, territorial integrity, security interests and development rights, the United States is no reason and excuse to collide, if you want to collide, the Chinese people will never agree, the United States will certainly meet the blood flow!"

Interesting translation within that last paragraph. I'd say the three points represent an ultimatum--Red Lines that must not ever be crossed, although it's clear some already were. That China is making certain its people are informed of its government's position versus the Outlaw US Empire makes it even clearer about the degree of seriousness involved that the Empire must not ignore.

Posted by: karlof1 | Jul 27 2021 18:26 utc | 181

@181, I forgot to properly format the text of the three points: The opening sentence in each paragraph ought to be bolded as it is in the original to make the point as clearly as possible. Sorry about that!

Posted by: karlof1 | Jul 27 2021 18:34 utc | 182

William Gruff @135

"out_there @105

It sounds from your posts more like you are fishing for arguments for how America could get away with a limited "little" nuclear strike on China."

No, that was not what I as seeking with my inquiries. Rather, I was asking whether anyone had any information as to whether a military alliance actually exists between Russia and China, and if so, what the implications of this might be for Russia's actions in the event of an attack by the USA.

In the replies thus far, I've seen no convincing evidence of such an alliance - which, as I've noted, is more than friendship, more than public statements of support: it's putting the possible future existence of Russia at stake in support of another country. Serious consequences, these.

If there is no such alliance, I stated it was not obvious to me what the Russian response might be in the event of a non-ICBM nuclear attack on China by the USA. Moreover, even if there were such a military alliance in existence, I noted that the same conclusion was reasonable - that it's not obvious that an "end of the world" all out nuclear attack would be Russia's response.

I'll merely note that in all the replies I've received thus far, a military alliance has been presupposed, not demonstrated, to exist. Without further evidence, I see no good reason to assume this is so. Further, in the various replies a number of scenarios were mooted as to what the Russians would do if there were such an attack. I see no reason to change my view that in fact this is no certainty - and indeed, much uncertainty - as to what the Russian response might be, given their history, their history with China, and the seriousness of any potential response.

None of this is to say that the Russians would not respond, only that what precisely that response would be is not obvious.

Posted by: out_there | Jul 27 2021 18:43 utc | 183

@Gordog #177:

Look, neither you nor I nor anyone outside of Larry Fink's inner circle knows what's actually going fact YOU, in partucular, least of all--- judging by your 'contributions' here.

What’s so wrong with jinn’s contributions that you’d put the word “contributions” in quotes? Jinn simply explained that the notional value of an interest rate bet is a misleading figure as only the interest payments are exchanged between the parties. That is correct. Why the hostility?

Posted by: S | Jul 27 2021 19:00 utc | 184

Here's an excellent contribution to the discussion about China's nukes and its capability to make more quickly. Check out the rhetoric used in its conclusion:

"Americans should know as clearly as the Chinese do about what level of nuclear power China really needs to build. It would be a nuclear force strong enough to make the US - from the military to the government - fear. To a significant degree, it could participate in shaping US public opinion toward China. The dynamic equilibrium will be achieved when the radical elites in the US completely lose the courage to even think about using nuclear weapons against China, and when the entire US society is fully aware that China is "untouchable" in terms of military power."

Posted by: karlof1 | Jul 27 2021 19:14 utc | 185

Look 'S', maybe you have the answer to the question I posed, about how there can be bets on 500 trillion in 'principal' when total worldwide debt is only half that amount?

No? You have no actual info to add?

But you feel the need to jump into a conversation in which you have had no part, and start petty squabbles?

Please respect the discussion and participants here---nobody is here to listen to somebody trying to play hall monitor!

Posted by: Gordog | Jul 27 2021 19:22 utc | 186

Gordog 145 "I think the Russian people want to go back to a more Soviet-style system. I think at this point Putin's fiddling around the edges has proved inadequate and needs to be overhauled completely."

Some do - that is why the opposition party in Russia is the communist party. I have never looked up the voting stats but have assumed the communist party gets somewhere between 25 and 40 percent of the vote. The majority do not want to go back to the communist system.
For twenty years Putin has had around a 60% approval rating. That and the voting record will give a good indication of what sort of political or governance structure Russia wants. There is aloso the constitution which is up to the parliament or Duma and referendum to change. Russia has what appears to be the safest and most effective vaccine in the world for the current bug, but very few take it. A lot have died. Gives another insight into Russians in general

Posted by: Peter AU1 | Jul 27 2021 19:23 utc | 187

Gordog wrote:

The entire, total amount of global debt is estimated at half that amount, 281 trillion.

The BIS was your source and now you are trying to impugn it?
There are several reasons it can exceed the total debt. For one thing, different parties may be making different bets on the same debt instruments.
Most interest rate derivatives are swaps where one party is swapping the interest of a real loan to the interest of a fictional loan at some agreed upon market rate (or LIBOR or Fed Fund Rate). There are 2 principal amounts each with a different interest rate, where at least one rate is fluctuating. The notional amount of such a swap could be twice the principal of the real loan.
You could also have a swap of two fictional loans at two different market rates where the parties are betting on two different market rates.In that case the agreed upon principals would be purely fictional.

Posted by: jinn | Jul 27 2021 19:29 utc | 188

WWI happened because Britain saw that time was not on its side.

Posted by: lysias | Jul 27 2021 19:30 utc | 189

karlof1 185

In its rise, China has invested very little in its military compared to other areas. As US hostility has increased China moves more resources to the military sphere. R&D, manufacturing ect. Like the chip war the US kicked off. While China could buy chips, they were better off concentrating on infrastructure, but now a major strategic objective will be to produce world class cutting edge chips. US shot themselves in both feet kicking off that war.
In the military sphere, I suspect China will have some input from Russian tech if required.

Posted by: Peter AU1 | Jul 27 2021 19:40 utc | 190

Calling Putin a Yelsenite neoliberal is laughable. Putin IMHO is above all (like most Russians) a *survivor*, and practical. To get a glimpse of Russia's future, look at what is successful and what is not... weapons in Russia are put together by "design bureaus" rather the Western style for-profit corporations, and I have no doubt these entities are much closer to the Chinese PLAN MIC, with zero tolerance for graft. Perhaps this will be seen as the kernel around which Russian corporations will begin to follow the Chinese economic model more closely.

Posted by: Simplicius | Jul 27 2021 19:48 utc | 191

Gordog @Jul27 19:22 #186

Notional Principal Amount

The notional principal amount, in an interest rate swap, is the predetermined dollar amounts, or principal, on which the exchanged interest payments are based. The notional principal never changes hands in the transaction, which is why it is considered notional, or theoretical. Neither party pays nor receives the notional principal amount at any time; only interest rate payments change hands.

PS S and jinn have been here a while. They both are good-natured and make valuable contributions.


Posted by: Jackrabbit | Jul 27 2021 19:52 utc | 192

chu teh | Jul 27 2021 14:03 utc | 148

Recall "The banker is willing to take the risk"...see the inference that "the banker" takes the risk? That is flim-flam and has no real substance. It is the banker's bank that must deliver on the bet.

Yes. Absolutely. But behind every posh Banker there seems to be a gullible citizen.

Example from the beginning of the "end is near".
Once upon a time, a long time ago......
Anglo-Irish Bank got into trouble. Bets going wrong on something or other. The Irish Government “stepped in” heroically and signed a paper to save it. Condemning the Irish population to pay for the “save it” via their taxes. However, it wasn’t the AI Bank that had made the blunders, but German Banks (Landesbanks, if I remember correctly) who had been speculating illegally using AI Bank as a front. (under German law they were forbidden to do so). The Irish were (are still) on the hook to pay the debts of German Bankers, who had to guarantee the assets of their investors (as a Commercial Bank, these were ordinary German Savers, who else)

This was the original sin, because since that period it has become “accepted” that all taxpayers will (have to) “save” Banks.

Thanks to William Gruff | Jul 27 2021 9:51 utc | 127
and Gordog | Jul 27 2021 16:04 utc | 161
as well as chu teh | Jul 27 2021 14:03 utc | 148

Brooksley Born with"derivatives" contracts: The title of her document?
"A compendium of the rules that make up "rules-based derivatives".

May I introduce the concept of “overlap”?
This is that the popular meaning of “Derivatives” includes many related money-making scams, where multiple speculative contracts (bets) are made using the same base as an asset (debt/loan, equity, collateral of some sort). These can include repros, derivatives-as-themselves, rehypothecation, (Mortgage scam used in the sub-prime debacle, which might be included in the upcoming “rent-no rent” part of the mask-it and shutdown crisis), naked shorts and much of the HS algo trading. etc. Creating a legalized demihonesty, based on mutual “bankers trust”, which covers many forms of speculation, many forms of trade or contract, usually carried out at high speed.

These different forms can be carried out over many vectors by the same “actors”.

Notice that this can also include “shadow Banking”, as funny money (drugs, CIA, Presidents providing providential profits to parts of the family) and other doubtful sources find an interest in putting their cash into untraceable bets. Where they can get it back later as “clean”.

* example;
The old system of money laundering via casinos, went something like this; Big daddy arrives in Casino, changes money into chips. Loses half (Casino gets paid). Goes back to the till and gets a “certified” winning of the half that remains. Shiny bright and can be fondled openly.

Swop the word "Casino" for "Bank" and you get the idea.

(PS. can’t do that nowadays, the boys in blue know the trick)

"the end is nigh".

A followup should include the connections between Covid/repro-failure/interest-rates and the Schwab's Gland Reset. and the soft vs. brutal landing of the total financial system

and when.

Posted by: Stonebird | Jul 27 2021 19:53 utc | 193

I find it interesting that Ms Sherman, and not Mr. Blinken, is front and center in all this negotiating with our enemies now:

U.S. and Russian Experts Share Insights on Strategic Stability Ahead of Bilateral Talks

"Top U.S. and Russian diplomats are to meet in Geneva on July 28th to revive a high-level dialogue on strategic stability, which lapsed prior to the latest changing of the guard at the White House, and which its current master Joe Biden and his Russian counterpart Vladimir Putin agreed to revive during their recent summit in the Swiss city. Deputy Secretary of State Wendy Sherman will lead the U.S. team, which will also include recently confirmed Under Secretary of State for Arms Control Bonnie Jenkins, who has tweeted ahead of the talks that she is “committed to [reducing] the risk of nuclear war by effective arms control [and limiting] Russian and PRC nuclear expansion.” As for the Russian team, it will be led by Jenkins’ counterpart and Deputy Foreign Minister Sergei Ryabkov, as has been the case during the Russian diplomats’ interactions with two previous U.S. presidential administrations. In remarks ahead of strategic stability meeting, Ryabkov warned that that the Russian and U.S. diplomats are entering uncharted territories given the fact that their goal will be to integrate their processes with an architecture of strategic stability with respect to weapons and technologies that did not yet exist when the New START treaty entered into force in 2011. But what constitutes strategic stability in the U.S. view and in the Russian view? Can differences in these views be reconciled, and what issues should the diplomats of the two countries prioritize when they meet on July 28?"

Posted by: Bemildred | Jul 27 2021 19:55 utc | 194

Posted by: Max | Jul 26 2021 23:33 utc | 67

The biggest difference between the switchover from the communist economic model to the new (that's what matters, the economy, it feeds the people, makes them happy) was that in Russia it was largely Western money fronted by Russian opportunists, well connected former apparatchiks and others of the same ilk that acquired the spoils, when Putin took over he took some of the assets back, not enough though.

In China the approach was different, the Chinese borrowed from Lenin's NEP (the New Economic Policy) i.e. invited Western capital to form joint ventures with Chinese counterparts, the vast majority of the latter were the military at every level, also the district, regional or national cells of the communist party, the Chinese almost always held over 50% of the equity.

The Japanese high-tech and auto companies were the first to spot the attractiveness of the Chinese labour market, the wages were a fraction of Japan's labour costs. Other Western companies followed, the labour cost differential still remains, is why no US company followed the Donald's call to come back home. Many economic sectors excluded companies funded by purely Western capital for a long time (Taiwan money was the exception), in the financial sector the full liberalisation happened only few months ago, Goldman Sachs can only now operate in China without Chinese participation.

What the Chinese did was akin to the NEP except that there is no need for China to expropriate the assets now, as the Bolsheviks did when Stalin took over.

And this: China's GDP in PPP dollars has surpassed that of the US years ago, the PPP comparison is the only valid one because one pays for a cup of tea, or a tank in dollars in the US, sterling in the UK, Renbimbi in China ....

Posted by: Baron | Jul 27 2021 20:04 utc | 195

Regarding "limited" nuclear strike against China:

Sometime ago (can't remember where) I read funny story on similar question. US representatives "asked" if China would go nuclear if US used conventional weapons in attempt to destroy China's nuclear arsenal, thinking - hey, we are not using nukes, don't be MAD.

Only remotely official response was from China's general along the lines "Why don't you try it and find out yourself".

Anyway, same answer can be applied for limited nuclear strike.

Posted by: Abe | Jul 27 2021 20:10 utc | 196

Karloff points out the key paragraph of that Global Times article. As Nasrallah puts it, the "balance of terror" must be established, in the same way that Putin has said, "listen to us now"!

@Simplicius 185
The Russian MIC is an exception to the neoliberal rule. And it worked! The same model should be applied to all strategic sectors! Set goals. Plan. Demand high quality product. Subsidize. Protect. Train engineers and workers for the jobs. This is what every developmental state had always done, with South Korea and China being the most recent examples. But these policies will be hard to establish under Putinism, which has largely kept and advanced the Yeltsin capitalist machine. A different social and political force will have to push them through, IMO.

Posted by: Prof | Jul 27 2021 20:17 utc | 197

b. ask:

How long then will it take until the U.S. recognizes that and steps down from its illusion of supremacy?

The link provided on MoA week in Review by Bemildred | Jul 27 2021 16:10 utc | 153
#153 is part of the answer.

Not so long-term

Posted by: Rêver | Jul 27 2021 20:19 utc | 198

Prof 197

Look up Patrick Armstrong's piece "Putin once dreamed the American dream"

Going by what Martyanov has written at times, many Russians/Soviets, ordinary people, also had that dream.

Posted by: Peter AU1 | Jul 27 2021 20:24 utc | 200

« previous page | next page »

The comments to this entry are closed.