Secretary Yellen Dumps Cold Water on Chinese Dumping

US Treasury Secretary Janet Yellen is fresh from a trip to China, and she is fired up. Well, perhaps as fired up as one can surmise the Secretary gets.

But first: China.

As long-time subscribers and readers well know, China’s demographic situation is in shambles. The Chinese Communist Party even admits it, which should be an indicator of how bad things are given the CCP’s creative and liberal license with reality. One of the several negative impacts of a shrinking population is a correlated decline in consumption. For an economy as dependent on industrial overproduction to fuel growth as China’s, this presents a stark and simple reality: the Chinese population will never, ever be able to fully consume Chinese industrial output.

China’s only option is to start dumping more product overseas, as slowing down output causes myriad headaches at home: shrinking economic growth, higher unemployment, exposure of the CCP’s rising ineptitude, etc. Chinese overproduction has already dramatically restructured the world of manufactured goods since China signed onto globalization in the 1990s. The US, its European and Asian allies have simply had enough.

This is beyond simple trade protectionism and market competition. From Boston to Brussels to Busan, there is a rising awareness and unwillingness to endure the various economic, national security and environmental costs of allowing Beijing’s economic imperatives to run roughshod over the world’s industrialized and emerging economies.

Enter Big, Bad Janet Yellen.

Whatever policy disputes one might have with the Secretary notwithstanding, she has a well-documented support of limiting barriers to international trade and the flow of goods. Simply put: Secretary Yellen is a fan of free trade and the general global economic lift associated with globalization.

But Secretary Yellen is not a fan of Chinese economic bullying and product dumping. Even before she left China, there were reports of threats of US trade tariffs and other barriers. The Europeans are at work with several policies of their own, and the Chinese Communist Party? Well…

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Talking Iran and China on Danger Close with Jack Carr

If you’ve followed me for a while, you’ll probably recognize Jack Carr and his show Danger Close. Last week, he released our latest episode together and if you haven’t seen it yet, I encourage you to tune in.

This episode is about an hour long and we discuss a number of heavy hitting topics. We explore Iran’s historical and geographical influences on culture, along with the greater Iranian threat via proxy groups including Hezbollah, Hamas and the Houthis. We also discuss China’s birth rate crisis and the potential motives for a Taiwan invasion, portraying a bleak vision of the future as a desperate attempt to save a dying empire.

You can see more of Jack Carr’s content and watch the interview at the link below…

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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Should We Worry About Chinese Land Purchases in the US?

I’ve had a lot of you write in concerned about Chinese land purchases in the United States. There’s not much to be concerned about here, but let me paint the full picture for you.

Foreign ownership of US land is quite limited, and the Chinese portion of that is just a sliver of the pie (Canada has the largest piece of the pie for those curious). To temper worries even further, most of this US land is being bought by Chinese individuals simply trying to park their assets outside of China…and you can’t really blame them for that. If you need even more reason not to stress, just look at the historical precedence of foreign assets being seized in times of conflict.

It’s good to ponder these questions and keep an eye on things like foreign land ownership in the US, but as of now, there’s really no need for concern.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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The Chinese Housing Crisis: Evergrande’s Bankruptcy

Evergrande, formerly China’s largest property developer, has just declared bankruptcy and the fallout is going to be massive. Let’s look at how we got to this point and some potential paths forward.

The collapse of Evergrande is a consequence of the Chinese government’s hyper-financialization policy that floods the economy with citizens’ savings to ensure stability…clearly it didn’t work. However, years of this policy have contributed to a massive overbuild of real estate, which is where many Chinese citizens have parked their private savings.

So, the potential for economic turmoil to ensue is quite high. How can China prevent this from happening? They can follow a Western-style bankruptcy procedure, which could stir up a whole slew of problems, or the government could intervene and circumvent the court ruling, which could spark concern internationally and diminish the legal autonomy of Hong Kong.

Regardless of which path is chosen, there will be dire economic consequences and myriad of issues for China’s social stability.

Prefer to read the transcript? Click here

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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TranscripT

Hey everybody. Peter Zeihan coming to you from Colorado. The big news over the weekend is that a Hong Kong court has ruled that China’s largest property development group, Evergrande, is bankrupt and needs to be broken up. This is something that the Chinese government has spent a lot of effort on the last two years. Not happening because. Well, let me give you a little back story.

So there’s two big things that dominate the Chinese economy. The first is something I call hyper financialization. The idea that the government both de facto confiscates the savings of the citizen population so it can only go into projects funded by Chinese state banks, as well as massively expanding the money supply to the tune of like almost triple what we have here in the United States in order to make sure that there is plenty of cash sloshing around in the system so that banks can loan anything in any amount at low terms to anyone at any time, because if they can do that, they can expand, expand, expand and hire, higher hire.

And people who have jobs don’t go on long walks in large groups together. It’s a public stability, political control approach to finance. It’s not about profit. It’s about throughput, because throughput requires a lot of bodies anyway. That’s the goal. In that sort of situation, you get two things. Number one, you get companies like Evergrande who gorge on all this bottomless supply of debt to build, build, build, build, build, even if there’s no demand.

Second, you get a population who knows that their private savings is almost worthless because the Chinese government is forcing them to keep it in the state banks and they want to put it into a hard asset that preferably the state can’t control. And if they can’t get their money out of the country, then the next best thing is a hard asset in the country, which typically is property.

So you get people pooling their private savings in order to buy condos, and each condo is typically owned by a different consortium of private individuals making untangling it. Also, you have somewhere probably in the vicinity of 1.5 billion units in the country that have never been lived and never will be lived in. So you’re talking about 100% overbuild conservatively.

Some estimates say it’s as high as 3 trillion, which is just so far beyond stupid. Anyway, Evergrande going down means that their debts aren’t going to be serviced anymore and the physical assets they have had to be parceled up. And foreign investors are going to come in and see what bits that they can get. None of these things are things that the Chinese Communist Party would normally allow to happen.

So there’s a couple of ways that this can go. None of them are good. Option number one is we follow a Western style bankruptcy and restitution program where this system is broken up and a lot of their assets are sold at pennies, maybe dimes on a dollar, and it just goes away. If that happens, we will have a very clear idea of just how much the oversupply in the market is.

And you can count on private citizens being up in arms probably. I mean, the best estimate I’ve seen out of China is that 70% of total private savings is wrapped up in real estate. And most of these assets are worth no more than $0.10 on the dollar. So if you have a fire sale of the single largest player, which controls one sixth of the market, holy shit, things are going to get real very, very, very quickly.

Option number two is that the Chinese step in and abrogate the Hong Kong ruling. Now, legally this cannot happen, but the Chinese Communist Party is not really big on legal details when it comes to Hong Kong in particular. And I have no doubt that they could stick their noses in that. If that happens, that Evergrande goes on some sort of state drip and everything with the system just kind of limps on with the understanding now that Hong Kong has no legal authority over its own holdings, which will start an exodus of what few international firms are still there, regardless how this goes.

Don’t expect anything in the market to get better. This is not like, say, the TARP program that the United States put into place back in 2008 at the bottom of the subprime crisis, which kind of froze the market and put a Florida things and allowed for reforms and economic growth to eventually heal the damage of the subprime crisis.

This is this is a one off decision that is not just holding back one rock from rolling down the hill. Evergrande may be the biggest player in this market, but it is by far not the only one has been doing stupid things like this building condos that have no demand or running that like a Ponzi scheme. Every development company in the country basically operates this way, and the second and third largest players in the industry are state owned.

So you can count on the Chinese government not using this as an opportunity to break with the old model and put into place something sustainable. And even if all of a sudden this place were run by a bunch of Austrian economists, it’s too late. Housing demand, legitimate housing demand, housing demand for houses that people actually live in is dominated by people age 20 to 45.

People who are starting out well. 45 years ago, the Chinese government instituted the one child policy. You combine that with the most rapid urbanization program in human history and there are no longer enough people under age 45 to do anything that is consumption led, including home buying. So there is no path out of this that follows any pattern that we have established in a market environment which leads us to political and social outcomes, where the market economics are just atrocious and getting worse by the day with a government that is becoming ever more nervous about the state of the economy and the loyalty of its population.

I don’t want to say anything overly dramatic is like this is where it all starts to fall apart because we’ve had a lot of things like that go down in the last 18 months. But this cuts to the core of what enables the average citizen to actually support the government. And there’s no way we move forward from this without a lot of side damage.

China’s Energy Problem and Dealing with the Taliban

When one of your best options for securing an energy supply route is with the Pakistani Taliban, you know you’ve got some problems. So go ahead and add that one to China’s ever-growing list of ‘shit to figure out.’

The issue China faces is that securing a safe and reliable energy supplier is practically impossible no matter where they turn. Given their geographical position, the Chinese have to go through Pakistani Taliban territory, deal with rivals like India, go over treacherous terrain or a combination of all those.

China’s energy will remain vulnerable until they can sort this out, but at least they have a stockpile of low-quality coal to keep the lights on until then.

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First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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How Extensive is the Corruption in the Chinese Military?

The Accidental Superpower: Ten Years On

With a new “10 years later” epilogue for every chapter, comes an eye-opening assessment of American power and deglobalization in the bestselling tradition of The World is Flat and The Next 100 Years.

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I had a handful of y’all point out that not everyone in the recent Chinese purges was targeted for political reasons; instead, many of these folks are facing corruption charges.

The level of corruption within the Chinese military is unknown, but I bet it’s more widespread than most people think. Between the missile silos that lack functioning hatches and the ballistic missiles filled with water instead of fuel, China is experiencing a Russian level of corruption.

The extent to which this has impacted and will continue to influence China’s military readiness and modernization program is expected to be significant. So, for all my non-Chinese viewers out there, I hope you get a good chuckle out of all this.

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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TranscripT

Hey everybody. Peter Zeihan here. A few of you wrote in yesterday pointed out rightly that there is corruption in the Chinese government, and it’s not that not everything that Xi Jinping is doing is a purge of personnel for political reasons. I mean, that’s the primary thing, but it’s not the only one. He’s already pushed a quarter of a million people into corruption charges.

But for the military specifically, we’ve had a few things that have kind of bubble up over the last few days that are just a riot. So we now know that the the guy who was in charge of the country’s missile forces, as well as the secretary of defense, were in part dismissed last year because they had been siphoning money off from the procurement process.

And at some point over the summer of the fall, Xi Jinping discovered that all of those missile silos that the government has been building out in western China to achieve some sort of strategic parity. The United States, a lot of the hatches don’t open. And but that’s not the best part, The best part is that for a lot of the intercontinental ballistic missiles instead of fuel in the tanks, they just filled them up with water.

And that is something that, you know, you would expect to get kind of caught on. So you can only imagine how much stuff down the line has been lied about and stolen. But the only country that we can compare here to this level of theft would be Russia. We now know from the Ukraine war that probably two thirds of the funding that Putin has a lot of to the military over the last 15 years were just stolen.

I have no idea what the percentage is going to end up being for China. I’m sure it’s a lot higher than people were expecting. The only specific incident that I can think of where this fuel tank water issue is, even a meaningful comparison is back in the nineties when Russian MiG maintenance crews started siphoning off the coolant from the MiGs in order to drink it because it was cheaper than buying alcohol.

The scale of this appears to be just massive and obviously it’s going to have an impact on the readiness and the expansion of the modernization program of the Chinese military. Anyway, so this is kind of a yes, but or a yes and two yesterday. And everybody I hope you get a good chuckle out of it. And of course, with your Chinese, in which case, you know, tough.

Chairman Xi Jinping Guts the Chinese Military

The Accidental Superpower: Ten Years On

With a new “10 years later” epilogue for every chapter, comes an eye-opening assessment of American power and deglobalization in the bestselling tradition of The World is Flat and The Next 100 Years.

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Xi Jinping is doing his best Darth Vader impression and has the Chinese military in a force choke. After purging the system of anyone who can think, all that remains is the shell of a Defense Minister (now a press secretary for military diplomacy) and the “real” decision makers – the Central Military Commission – chaired by none other than Xi himself.

The Chinese military has remained largely untouched by Xi’s purges over the years, but this last round sought out any political players and corrupt personnel within the military. So, anyone with two brain cells, overly ambitious or competent, has been “relieved of duty.”

The Central Military Commission, which is now comprised of yes-men and sit-there-and-smile-men, will likely lose any semblance of military preparedness to prioritize ideological adherence. I’ll let you judge what that means for the future of the Chinese military…

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

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Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everybody. Peter Zeihan here coming to you from Colorado. We’re going to talk about some things that have gone down in China as regards to the military. Now there are a lot of folks who like to stress about the Chinese military and who are convinced that if we ever do get into a real fight with the Chinese, that we have our asses handed to them.

I’ve never been part of that crowd, mostly for an equipment point of view. They’ve got two carriers that have never seen conflict. We’ve got 20, which have seen lots of fights over the last several decades. Most of their ships can’t sail more than a thousand miles from shore. And that assumes that going in a straight line and no one’s shooting at them and they’re going slow to say fuel.

Whereas our fleet is fully bluewater capable. But I’m not going to talk about the technical aspects of the military today. But it said the leadership assets, the functional, the structural stuff. Now, in the United States, we have a defense secretary who’s in formal command of the forces and who reports directly to the president as a member of the cabinet.

So orders go from the president to the secretary of defense to the troops. That’s not how it works in China. In China, the defense minister does not have operational control over the military or over policy. They’re more of a glorified press secretary that deals with military diplomacy. And they are, as a result, the interface with our folks. But those are the decision makers.

The decision makers sit on the Central Military Commission, which is chaired by. Now, if you go back a few months, the Chinese government has been seeing a series of purges for all the not just a few months for 14 years now. And it claimed the defense secretary over this past summer and it took a while to happen. The guy basically vanished, didn’t show up at the office, wasn’t in first at all for two months before he was formally disposed.

And it’s only in the last couple of weeks that we finally have a new defense minister, a guy by the name of Dong Zhu, and he’s a an admiral. But again, the defense minister position in China is not all of that. The real decision making power lies elsewhere. Now, the issue that we’ve been seeing in China as regards to these purges has been robust.

It’s about JI trying to tighten his grip on everything. And over the course of the last few months, he’s fired 20 top level people, 12 in just the last two weeks In order to put his stamp on the military. You have to look at this from his point of view. When he came in, China was one of the most corrupt countries in the world.

And also it was one of the more centrally disassociated the Chinese Communist Party industry has tried to be very centralized and to all decision making to flow through Beijing into Xi personally. And China is a country of, you know, 1.3 billion people. And that requires a lot of hands on government at the regional and the local level. And when you’ve got decision making it the regional and local level people make decisions at the regional and the local level.

And that means that she would rather have them singing his praises rather than doing the dirty work of day to day governance. So he submitted a series of purges both to go after the corruption and against his political competition, perceived or otherwise. And over the next 12 years, basically gutted the system of anyone who might stand against him by going against anyone who might stand up.

And so whether it’s in local government or state government or in academia or business or in the federal bureaucracy, it has been purged of anyone with any ambition and any competence. The reason that the military was left out of those first several purges is because it was strong and because these people had guns. You deal with that last.

And now he’s starting to deal with that as well. And so a lot of the purges we have seen are going after either political players or folks that are actually guilty of corruption. And so, you know, about 20 so far, including a recently appointed defense minister ticked by, none other than Xi himself. Now, remember that Central committee that does the military planning and is now stacked just like the Chinese Politburo with incompetent.

Yes, man. Well, not even people who say yes, people won’t say anything because she doesn’t want to be bothered. So what we see now is starting to impose upon the military the same structural gutting that we’ve seen for everything else. China’s already gone from having a bureaucracy to one that doesn’t function at all because nobody wants to transmit information because they don’t know how she’s going to respond.

And now we’re seeing that in military activities as well. So is this good or bad? Well, it really depends upon who you are and where you care about and where you live. But think of it this way. In the old system, China’s military preparedness and capability was probably sharply limited by lack of expertise and by massive corruption, things like Russian style stealing of the funds.

Now, if she has his way, a third of the working hours of all the military will be spent reading texts written by Jingping about Xi Jinping, about how wonderful his using Peng is. Which one of those makes a better military? Not quite sure. It matters.

Naval Power in the Pacific: China vs. The United States

There’s been much discussion lately surrounding the changing power balances in the Pacific – specifically the dynamics between the US and China. Sure, China has numbers, but would you rather have 25 kayaks equipped with BB guns or five speedboats mounted with mini-guns?

That’s pretty much the whole story between these two powers – quality over quantity. That’s before we look at the fun new toys that the US is introducing, which will only bolster their strategic advantage in places like Midway and Guam.

With the Biden administration taking a firmer stance on security measures, I expect the United States’ strategic advantage over China to grow. However, that doesn’t mean we should completely disregard the Chinese navy just yet.

Prefer to read the transcript? Click here

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Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everybody. Peter Zeihan here coming to you from Colorado where we’re about to get a big dump of snow. So I figured I’d get out and hike while I could. Today we’re going to talk about some of the changing power balances in the Pacific Ocean, specifically as it relates to the United States versus the Chinese. Now, everyone seems to be all paranoid, almost a little defeatist about the concept that the Chinese have more ships in the water than the United States has.

Based on how you count those ships have got between 370 and 620. And on the American side, again, based on how you count the ships, somewhere between 250 and 300. So, you know, obviously there’s more there. But the bigger concern from my point of view, isn’t so much the number of ships, it’s the range of the weapon systems.

So most Chinese vessels are very small. In fact, just a couple thousand tons. Things that the United States, as a rule, doesn’t even bother fielding because they’re too vulnerable in their ranges to limited. So only about 10% of China’s ships can actually go more than a thousand miles. And very few of them have a strike capability that’s more than a couple thousand miles.

Obviously, America’s super carriers are fully blue water capable and with their aircraft can strike things considerable distance away, especially if they’re using standoff missiles. So I’ve never considered this a fair conversation or a fair fight in the first place. But let’s say that I was concerned that say that with the Chinese expansion of intermediate range missiles, kind of in the 500 kilometer or 5000 range, that they could really hold back US naval forces.

Well, if that is your concern, never really was mine. But look, if that is your concern, you can have whoa, slick. All of a sudden you can rest easy because there have been a couple of new developments in the Pacific that are going to be fully manifested by the end of next calendar year. The United States is going to be deploying two new types of weapon systems.

The first is a land based intermediate range missile, something that until recently was illegal in the United States during the late Cold War. The first big arms control treaty was called the Intermediate Range Forces or INF Treaty, and it barred any sort of land based missile with a range between 500 kilometers and 5500 kilometers. The idea is that if you remove those from the equation, then Europe is relatively immune from a blitzkrieg nuclear strike from the Soviet Union and vice versa.

The land based systems in Europe wouldn’t be able to hit the western parts of the former Soviet Union, where the bulk of the Soviet population lived. Well, two things led to that treaty’s demise in 2019. First, the Russians just started ignoring it and deploying their own weapons systems. And second, the Chinese, who were never a signatory, started implementing these things in mass.

So rather than work with the United States to expand the arms control regimen to give themselves greater security, they just decided that everybody else sucked and they do it anyway. And apparently they believed that everyone else was just too dumb to follow suit. Well, so if you think about how fast this has happened, the treaty was abrogated in 2019.

First discussions on these new weapons systems would have happened within the next year. It’s only 2023 and they’re to be implemented by 2024. So he notes, that’s pretty quick for weapons development system. The Pentagon’s been pretty tight lipped about the range of the new systems, but they’re making it very clear that at the moment they’re not going to Japan or the Philippines.

They’re only going to U.S. territories like Midway and Guam. And of course, the Australians are there and they’re going to pick me, pick me. So they’ll probably be some in Darwin as well. And that basically allows the United States, with the flick of a few buttons to launch cruise missiles with ranges in the thousands of kilometers to basically intersect any shipping route and any naval patrol that the Chinese are currently putting out, although these are mostly land based.

So it’s going to be more about wind tech for the most part. Which brings us to the second piece. There’s another new weapon system that is going out primarily to the subs, and that is a version of the Tomahawk cruise missile, which will now be able to target maritime targets. So for those of you who remember back to the Gulf War in 1992, we’re going to break here for a minute.

Sorry about that fire mitigation crew. Kind of noisy anyway. Sea launched Tomahawks, which will be able to target maritime targets. Now, for those of you who remember back to 1992 in the Gulf War, you’ll recall that they were the first of our smart weapons basically systems. They could follow a GPS map and target things from over a thousand miles away with a warhead that has about a half a ton.

Now, you throw something like that against a vessel. There aren’t a lot of vessels that can take more than one hit from something like that. The problem, of course, has been targeting remotely. Now you can use reason GPS information to target your missiles. The Chinese do some version of that with their ballistic missiles, which are designed to take out U.S. naval targets.

The problem with that strategy and one of the reasons why I’ve never been overly impressed with Chinese weaponry is unless you have active eyes on your missiles blind, it can’t adjust on its own. So you can program in a path kind of like what the Shaheed drones are being used for in the Ukraine, where the Russians, they basically program in a specific point in space.

So when they hit a school or apartment complex, they’re specifically aiming for it. They’re kind of dumb weapons, even if they do have some degree of guidance. But ships move and that doesn’t work. So the Chinese rely on satellite recon in order to provide placement. But the Chinese don’t have a satellite warfare system like the United States has had for 30 years.

So if you remember back to our Chinese, it’s been a while, 15 years ago, maybe there’s an eight. I think there was all this hubbub blue when the Chinese destroyed their first satellite and created that debris field that took out a lot of stuff. Well, very quietly over the course of the next day, the United States, just to underline to the Chinese, how far behind they were, took out a half a dozen of our old satellites using a half a dozen different weapons programs to show to the Chinese that, like, look, you may think you’ve got a gun that can target our Navy, but if we ever get into a hot war, the first thing

that’s going down is your entire satellite network. So stop it. Of course, China only became more narcissistic nationalists after that, but they haven’t fixed the underlying problem the U.S., however, has. We all talk about artificial intelligence and how the Chinese have 1.5 billion people and all the coders they want and all the data they want. That’s true. But they very tightly control the type of A.I. that can be developed because they don’t want independent decision making, and they certainly don’t want anything that’s going to give people an independent means of existence independent of the state.

So a lot of the things we’re seeing here are things like church liberty. They’re just not allowed there because they could be used for political purposes. And that means the United States has a much more well-rounded approach to A.I., including in its weapons systems, whereas the Chinese are precisely focused on social monitoring to keep their population under control.

Well, that technology is undoubtedly in play with this new version of the Tomahawk that can target surface ships because ships move. So you now have the quite a subs in the world with the greatest range in the world and in addition to their normal weapons outlay. By the end of next year they’ll also be packing tomahawk hawks that can target naval vessels.

So in the case of a hot war, you put two or three American missile submarines out there and you know, the Chinese don’t have a long reach navy because you use those systems to hit the ships that do have range and nothing else can leave far beyond sight of the coast. So, you know, done and done. Now, there is unfortunately a political component to this, because if you’re looking at these technologies, I mean, medium range cruise missiles are things we stopped working on back in the late eighties because of the INF Treaty.

And the Tomahawk is a weapon that was first debuted in 1992. So none of these are new. So the question is, with the Chinese becoming more jerk like and the Russians becoming more jerk like day by day, why haven’t these things happened faster? Well, some of this is explainable, so go all the way back to the Clinton administration.

It was the early post-Cold War days. We were all trying to be friends. Why would you develop a weapons system to specifically target your hopefully, friends? That makes sense. Second, the W Bush administration was when relations with the Russians and the Chinese started to turn. But the W Bush administration was more than a little occupied with things in the Islamic world, and especially when it came to the operations in Afghanistan, The more reliable partner for us in getting equipment to our troops in Afghanistan was Russia, much more so than Pakistan.

So I can understand why it was backburner then. But by the time you got to the Obama administration, the Russians had started invading people again. The Chinese were just shamelessly stealing everything that they could and starting to hack into government databases. But President Obama couldn’t be bothered to have a meeting with anyone. So nothing happened for eight years.

He also kind of unofficially thought of the U.S. military as an enemy and didn’t want to imbue it with any more power than he had to. Well, let me get to the Trump administration. Will, you know, updates to the strategic doctrine, a new weapon, systems that doesn’t work by tweet. And so we basically got some strategic incompetence, two administrations in a row lasting 12 years during the period while the Russians and the Chinese were starting to feel out how they could expand their influence.

So it wasn’t until Joe Biden that we actually got firm decision making on the development and deployment of these things. So there’s a lot of reasons I don’t like Joe Biden, but one of the advantages of having a president that’s been around for 170 kajillion years is back in the eighties when he was a full grown great grandpa, he remembered these systems.

He remembered the dawn of the tomahawk, He remembered the weapons we were working on when the IAF treaty was adopted. For him, the context that was necessary to develop in order to make the political decisions to order these developments was already there. And so as long as he’s not a drooling mess, we’re getting a lot more robust security decision making, especially forward looking decision making than we have had since at least George Herbert Walker Bush in 1991.

Is it enough? We’ll see. But if you were the the Chinese or the Russians and you were counting on the general incompetence of Obama and Trump to be the new norm for American politics, I can happily report to you that you were flat out fucking wrong and now you have to deal with.

 

Russia and China Gang Up on Finland

The schoolyard bullies are back at it again. Russia is funneling waves of migrants into the Finnish border, and China has wreaked havoc on the Gulf of Finland by dragging an anchor across the sea floor.

These are clearly intentional and deliberate actions, but what do they signify? In all likelihood, these indicate potential cooperation between Russia and China in different global theaters – challenging the ability of the US to focus on multiple fronts.

We’ve discussed this in the past, and I’m not too worried about the United States’ ability to handle both Russia and China simultaneously. Click below for a refresher:

Can the US Military Fight Russia and China?

Besides Russia (once again) underestimating Finland’s support network, these actions will likely spark some changes in naval patrol patterns for the US.

Prefer to read the transcript? Click here

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

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TranscripT

Hey everybody. Peter Zeihan here coming to you from Phenix, where I’m on my last business trip of the year. Very exciting. Today we’re going to talk about something that the Russians and the Chinese are doing against Finland, of all places. We’ve had two big events over the course of the last few weeks. Number one, the Russians started funneling illegal migrants from Central Asia and South Asia into the Finnish border.

Clearly, this was intentional, clearly that it was premeditated because you don’t go from having less than one person a day to almost a thousand in an area that the Russians consider a security zone. Second, the this one, Solaris the Chinese in with the container ship new new polar bear. Makes more sense in Mandarin dropped their anchor in the Gulf of Finland between Finland and Estonia and then proceeded to drag the anchor on the seabed for about 20 miles until they suffered a telecommunications cable and damaged pipeline or sorry, it was an electricity transmission and make them some cable damaged pipeline.

Again, that’s not something that happens by accident. And in both cases, the Russians, the Chinese are kind of going like, what do you do about it? And it’s not clear exactly what anyone is going to do about it, because it’s one of those definitely less than war scenarios. So we’ve got three things going on here. First is this is practice for the Russians and the Chinese.

They’ve never really functionally cooperated before. They’ve certainly never coordinated their actions. But in doing two things in different theaters versus the same country that has managed to displease the Russians of late by joining Dito, this is practice for kind of a larger scale. Well, the U.S. does not consider itself capable of being involved in two major military operations at the same time, even though one would be naval and China and one would be on the land in Ukraine.

But, you know, putting that to the side. So anything that forces the United States to look in two directions at once is kind of a win in above itself, even if nothing comes from it. Second, there is the issue of implications for action. And we’re already seeing NATO countries changing their naval patrol patterns to look out for things like the Chinese.

Because, you know, when you’re dragging your anchor for 20 miles, it’s not like that is a normal bit of operation. Oh, by the way, they found sea anchor. They matched it to the vessel in question. So the Chinese are, you know, doing their normal association and lying thing. But the Finns and the Estonians really have no doubt as to what went down here.

But then there’s the third issue, and that’s the target choice. Now, until recently, Finland was officially a neutral country because it was terrified of facing the Soviet Union. And then eventually the Russians. It’s not that they think they’re weak. It’s that they know that they’re outnumbered. So if you go back to World War Two, the Finnish chapter of that conflict was called the Winter War.

And when Stalin’s troops came in, they were massacred in the winter conflict, looking at 2241 casualty ratios throughout the winter. But when the snows finally went away and the advantage of just being able to ski through the Russian forces went away. The Finns were forced to sue for peace and accept a deal that gave up territory on which about a quarter of their population prewar lived.

It’s something the Finns have never really forgotten. And so ever since then, the Finnish military has basically prepared for one fight. What happens when the Russians finally come? But this is a creative country that has shown that it can punch well, well, well, well above its weight. It arguably has the most effective military in terms of per capita in natto.

And they’re starting to trade with nature now that they’re members. And they just kicked everybody’s ass in the biathlon competition last winter, which, you know, they’re terrifying because that’s one of the reasons why the casualty ratios were so high, because these are all natural sharpshooters and these are all natural ski folks anyway. Also, when the Finns are involved, it’s not just the Finns.

They’ve got their kind of little brothers, if you will, Estonia, Latvia and Lithuania. But more importantly, they get along excellently with their other Scandinavian cousins in Denmark and Sweden and Norway. You know, the Vikings, not to mention excellent relations with the United Kingdom and now the United States. So basically what the Russians have done is pick someone that they thought was on the fringe they thought was alone.

But primitive is representative of the fact that Russian decision making at the diplomatic and security level has really broken down. They’ve kind of forgotten that even Stalin was a little bit scared of the Finns. And so they walked around and now they’re going to find out.

 

My Latest Interview on the NAIOP Podcast: Inside CRE

For those looking for some longer format content, here’s a recent interview from the NAIOP Podcast: Inside CRE.

LISTEN TO THE NAIOP PODCAST

I chatted with Christopher Ware about current U.S. demographic shifts, how the labor force is changing, and why now is the best time for businesses to hire and borrow. I also dive into China’s precipitous population decline, how the cost of manufactured goods will increase, and why we need to double the size of the industrial plant in North America.

I encourage you to tune in if you want a well-rounded, long-form discussion.

Here at Zeihan On Geopolitics we select a single charity to sponsor. We have two criteria:

First, we look across the world and use our skill sets to identify where the needs are most acute. Second, we look for an institution with preexisting networks for both materials gathering and aid distribution. That way we know every cent of our donation is not simply going directly to where help is needed most, but our donations serve as a force multiplier for a system already in existence. Then we give what we can.

Today, our chosen charity is a group called Medshare, which provides emergency medical services to communities in need, with a very heavy emphasis on locations facing acute crises. Medshare operates right in the thick of it. Until future notice, every cent we earn from every book we sell in every format through every retailer is going to Medshare’s Ukraine fund.

And then there’s you.

Our newsletters and videologues are not only free, they will always be free. We also will never share your contact information with anyone. All we ask is that if you find one of our releases in any way useful, that you make a donation to Medshare. Over one third of Ukraine’s pre-war population has either been forced from their homes, kidnapped and shipped to Russia, or is trying to survive in occupied lands. This is our way to help who we can. Please, join us.

Support medshare's ukraine fund
Support medshare's global efforts