The overwhelming majority of Russian natural gas supply cannot be sold elsewhere, as its LNG infrastructure is not well developed and the pipelines run to Europe. Oil is much more flexible. If Russians sell their oil in Asia (at steep discounts) then those Asian consumers need not buy somewhat more expensive non-Russian oil, which is then bought by European consumers. Market magic. The fact that oil prices haven't spiked up by multiples, as natural gas prices in Europe did, and further that oil prices have fallen from a high of ~$130/bbl to $90/bbl when the average for the last 5 years is $70/bbl, indicates that this pivot of the oil market is in fact happening. Europeans are more sanguine now than they were several months ago, as they find alternate supplies of LNG and substitute gas with other fuels. Germans have decided to postpone the closure of their last remaining nuclear reactors, but haven't decided to restart recently closed ones - that must indicate that they are far from desperate. I doubt the majority of German voters would really prefer freezing to restarting nuclear power plants.
I think China is more constrained by its zero Covid policy than real-estate problems. Which is odd. The strength of the Chines economy has been the willingness to do the economical efficient thing over the politically correct. Covid zero is not the result of a cost benefit analysis.
The worrying part in this scenario (which I generally find plausible) is that it jumps to the end state, but the global stability risk of a declining power (Russia) and a peaking power (China, presuming a rough parrallel of late Cold War Russia) means two nations where internal stability can’t be bought by economic growth... and we have good examples where the ruling government attempts to get stability in other ways that aren’t great.
Where is the talk of INFLATION? Many think it's the biggest US economic problem.
All of the other G-7 countries, as well as China, are in worse shape than the US (Canada not better) so the excess dollars printed by the US gov't will not result in as much inflation as expected, as measured by FOREX. One Euro is worth less than a US$, Japan's yen has dropped in value.
If Biden had good people to increase US oil & gas, and solve baby formula & other supply chain mess ups, the US inflation rate would go lower even without Fed rate increases - which are too little too late combined with Democrat policies increasing demand and reducing supply.
Even at a big discount to China & India, Russian oil is letting Putin spend billions, with oil far more expensive under Biden = profitable and helpful to Putin.
For years, decades, China watching bears have been wrongly predicting a collapse. The death of some big Chines companies, combined with COVID lockdowns, seems to be very very harmful. Plus the under reported drought: https://phys.org/news/2022-08-china-drought-worst-heatwave.html
Simultaneously less and more dangerous - but the OECD response to Russian invasion might be Taiwan's biggest shield from an invasion by Xi (plus the ocean).
China's nuclear reg agency giving the OK to a new Thorium molten salt nuclear reactor is mid- & long- term news for energy.
The UK will probably start fracking, maybe even more nukes. What will Germany do with its nukes?
I'm expecting Putin to negotiate keeping Crimea, but maybe not until after a difficult/ energy very expensive winter.
The EU & NATO are likely to become stronger, with more pro-Christian, pro-capitalist, pro-nation state parties gaining power in many countries, and the global elite anti-nationalism & green parties losing power, but slowly. Sweden & Finland wanting protection from NATO seems like more realism/ realpolitik than too much EU happy talk of the last two decades, and laughing at those who say it's foolish to be energy dependent on a hostile country.
I'm feeling pretty good in Slovakia - went out to sing Karoke last night. There was one place with a small group singing a Russian song; we went to another English-Slovak singing place.
This year is a good example of historical trends being guided by powerful leaders and what those leaders believe. The individuals with power combine with the trends to determine what happens - kind of like how individual will & action combines with genetic tendencies and external opportunities to determine results for individuals.
Europe would have plenty of their own natural gas if they would get rid of their ban on fracking. The question is whether virtue signaling will win out over economic prosperity.
Saudi Arabia is buying Russian fuel oil to produce their electricity which frees up their own output to sell for higher prices in other markets. Nice bit of arbitrage.
"Russia’s official line is that sanctions are not hurting the economy. But if that were true, they would probably not be shutting off gas to try to get European countries to remove the sanctions."
Yup. I think this has to be right. The *threat* of cutting off gas was so much more potent than actually doing it, that you'd figure they're either not very good at this whole geopolitics thing (possible) or they were in a position where they had to execute on the threat.
Russia is too small a part of the world economy for its shrinking to have much impact on the US. Europe is more serious. International trade and investment in general is a good thing that benefits all parties; so Europe becoming poorer is not good for the US.
Putin is done. There was at some chance that if the frontlines stabilized into a stalemate he might have walked out of this is a negotiated settlement. Now that its clear Ukraine can make stunning gains in short order, I can't see anyone ever negotiating.
It's also apparent that Putin doesn't really believe in escalation. He hasn't mobilized. He hasn't brought new tactics or weapons to bear. And while some of that might have made a difference months ago, at this point it's probably too late.
Whether this means the war will end soon, who knows. The only way it would really end at this point is with a stunning collapse of the Russian war effort. It's possible it will just drag on, but Putins not going to get to keep anything in the end.
The only regrettable part of this is that apparently it has taught people that the American Empire is great again and we need to go abroad looking for dragons to slay. Or in Noah's case, that every single aspect of his ideological outlook is fundamentally correct and can not be questioned.
Clearly, the successes and failures will not be absolute. Still this is an interesting take on why America (and the Americas, India, etc) will be less hurt by the war.
I think liberals (or more accurately, free marketeers) need to take the L on touting blanket free trade with illiberal regimes as a trouble-free way to bringing the world together.
I still believe in mostly free trade, but it's evident that while it can make everyone better off, it's also no necessarily so.
Putin is deeply morally and legally wrong to have launched an invasion. Ukraine is absolutely right to fight for its defense and to defeat Russia. It is good policy for the US / NATO to facilitate that outcome. And yet, I cannot muster enthusiasm for the fight. The invasion should never have happened and that it happened has tripped dominoes that will greatly elevate immediate human suffering and escalate the risk for great global calamity.
Remember, one of the early justifications for Western aid to Ukraine was that Russia was aiming to rebuild the Soviet Union. Maybe that was true ideologically. Militarily it was not true and now we know it isn't true. Russia is weak. And what has happened supports my original thesis that Putin invaded out of desperation. Putin saw the inevitable of Ukraine joining Western Europe and determined the only chance to stop that was to attack and hope the West would react the same as they reacted when Russia retook Crimea and suppressed Georgia from joining NATO.
But why did Putin think he could succeed going after such a prize as Ukraine. For unlike Crimea or Georgia, the West clearly had a stake in Ukraine. Why did Putin think Ukraine would fall? And if Putin did not think Ukraine would be obtainable, would he have invaded?
I offer that Putin's notion for success was triggered by Biden's disastrous pullout of Afghanistan. This sent the signal that Biden, like Trump, was disengaging the US from the international stage. But unlike Trump, Biden didn't care about making the USA look weak. Putin was worried about Trump choosing or being forced to retaliate harshly against Russian aggression. He did not have this concern with Biden, which was a misread of the situation by Putin.
My greatest concern is the utter lack of prioritization for peace. I appreciate the defense of Ukraine includes the American bravado of "making Russia pay". Vengeance, however good it may feel, will further destabilize international relations.
‘European liberalism’... is an oxymoron as is European democracy. There have been some great liberal thinkers in Europe (Continental), and Europe has voting, but to speak of either as indicating a prevailing ideology and polity of liberalism and democracy is to speak of things that do not nor have ever existed in Europe. Europe has been, since the time of the Romans, one long precession of authoritarian regimes - absolute monarchs, emperors, dictators, revolutionary committees, autocracy, Fascism/Dirigisme, Communism/Socialism - and it’s current state a centralised, technocratic tyranny running a protectionist economic bloc in a manner that would make Mussolini proud. As the German Minister put it, Germany would stick by Ukraine no matter the hardship, no matter what the German voter wants, it’s what the Government says that counts. . How’s that for liberalism and democracy? Backing Ukraine against Russia is like backing Stalin, that erstwhile ‘good guy’ of the war years, against Hitler. As for USA and NATO Governments - not populations - backing Zelensky, as my teacher at primary school used to say, show me your friends and I’ll tell you what you’re like. Those Governments were the same ones in case short term memory has failed, which followed the playbook of the most tyrannical, thuggish, brutal, murderous regime on the Planet... China, so their yap of supporting freedom and democracy and sovereignty - Iraq? Afghanistan? Syria? Libya? is humbug. It shows the low grade intellect of those commentators who seem unaware of the reality in Europe right now, or indeed the hell-in-a-hand-cart USA. The only Western economy left standing? Lucky if it’s left flat on its face.
Looking at all of this from Europe, I have a feeling that the scenarios Zeihan predicted are coming true. Alas, everyone here still seems to believe that this can be undone, that we will return to the pre-2019 and pre-February 2022 world. This was articulated recently by Habermas, who repeated with philosophical pathos the fairytale of a new European unity born out of confrontation with Russia.
Arnold, what probability would you assign to the possibility that the EU will not survive this decade in its current form?
The overwhelming majority of Russian natural gas supply cannot be sold elsewhere, as its LNG infrastructure is not well developed and the pipelines run to Europe. Oil is much more flexible. If Russians sell their oil in Asia (at steep discounts) then those Asian consumers need not buy somewhat more expensive non-Russian oil, which is then bought by European consumers. Market magic. The fact that oil prices haven't spiked up by multiples, as natural gas prices in Europe did, and further that oil prices have fallen from a high of ~$130/bbl to $90/bbl when the average for the last 5 years is $70/bbl, indicates that this pivot of the oil market is in fact happening. Europeans are more sanguine now than they were several months ago, as they find alternate supplies of LNG and substitute gas with other fuels. Germans have decided to postpone the closure of their last remaining nuclear reactors, but haven't decided to restart recently closed ones - that must indicate that they are far from desperate. I doubt the majority of German voters would really prefer freezing to restarting nuclear power plants.
I think China is more constrained by its zero Covid policy than real-estate problems. Which is odd. The strength of the Chines economy has been the willingness to do the economical efficient thing over the politically correct. Covid zero is not the result of a cost benefit analysis.
The worrying part in this scenario (which I generally find plausible) is that it jumps to the end state, but the global stability risk of a declining power (Russia) and a peaking power (China, presuming a rough parrallel of late Cold War Russia) means two nations where internal stability can’t be bought by economic growth... and we have good examples where the ruling government attempts to get stability in other ways that aren’t great.
Where is the talk of INFLATION? Many think it's the biggest US economic problem.
All of the other G-7 countries, as well as China, are in worse shape than the US (Canada not better) so the excess dollars printed by the US gov't will not result in as much inflation as expected, as measured by FOREX. One Euro is worth less than a US$, Japan's yen has dropped in value.
If Biden had good people to increase US oil & gas, and solve baby formula & other supply chain mess ups, the US inflation rate would go lower even without Fed rate increases - which are too little too late combined with Democrat policies increasing demand and reducing supply.
Even at a big discount to China & India, Russian oil is letting Putin spend billions, with oil far more expensive under Biden = profitable and helpful to Putin.
For years, decades, China watching bears have been wrongly predicting a collapse. The death of some big Chines companies, combined with COVID lockdowns, seems to be very very harmful. Plus the under reported drought: https://phys.org/news/2022-08-china-drought-worst-heatwave.html
Simultaneously less and more dangerous - but the OECD response to Russian invasion might be Taiwan's biggest shield from an invasion by Xi (plus the ocean).
China's nuclear reg agency giving the OK to a new Thorium molten salt nuclear reactor is mid- & long- term news for energy.
The UK will probably start fracking, maybe even more nukes. What will Germany do with its nukes?
I'm expecting Putin to negotiate keeping Crimea, but maybe not until after a difficult/ energy very expensive winter.
The EU & NATO are likely to become stronger, with more pro-Christian, pro-capitalist, pro-nation state parties gaining power in many countries, and the global elite anti-nationalism & green parties losing power, but slowly. Sweden & Finland wanting protection from NATO seems like more realism/ realpolitik than too much EU happy talk of the last two decades, and laughing at those who say it's foolish to be energy dependent on a hostile country.
I'm feeling pretty good in Slovakia - went out to sing Karoke last night. There was one place with a small group singing a Russian song; we went to another English-Slovak singing place.
This year is a good example of historical trends being guided by powerful leaders and what those leaders believe. The individuals with power combine with the trends to determine what happens - kind of like how individual will & action combines with genetic tendencies and external opportunities to determine results for individuals.
Europe would have plenty of their own natural gas if they would get rid of their ban on fracking. The question is whether virtue signaling will win out over economic prosperity.
Saudi Arabia is buying Russian fuel oil to produce their electricity which frees up their own output to sell for higher prices in other markets. Nice bit of arbitrage.
"Russia’s official line is that sanctions are not hurting the economy. But if that were true, they would probably not be shutting off gas to try to get European countries to remove the sanctions."
Yup. I think this has to be right. The *threat* of cutting off gas was so much more potent than actually doing it, that you'd figure they're either not very good at this whole geopolitics thing (possible) or they were in a position where they had to execute on the threat.
Russia is too small a part of the world economy for its shrinking to have much impact on the US. Europe is more serious. International trade and investment in general is a good thing that benefits all parties; so Europe becoming poorer is not good for the US.
Putin is done. There was at some chance that if the frontlines stabilized into a stalemate he might have walked out of this is a negotiated settlement. Now that its clear Ukraine can make stunning gains in short order, I can't see anyone ever negotiating.
It's also apparent that Putin doesn't really believe in escalation. He hasn't mobilized. He hasn't brought new tactics or weapons to bear. And while some of that might have made a difference months ago, at this point it's probably too late.
Whether this means the war will end soon, who knows. The only way it would really end at this point is with a stunning collapse of the Russian war effort. It's possible it will just drag on, but Putins not going to get to keep anything in the end.
The only regrettable part of this is that apparently it has taught people that the American Empire is great again and we need to go abroad looking for dragons to slay. Or in Noah's case, that every single aspect of his ideological outlook is fundamentally correct and can not be questioned.
Clearly, the successes and failures will not be absolute. Still this is an interesting take on why America (and the Americas, India, etc) will be less hurt by the war.
I think liberals (or more accurately, free marketeers) need to take the L on touting blanket free trade with illiberal regimes as a trouble-free way to bringing the world together.
I still believe in mostly free trade, but it's evident that while it can make everyone better off, it's also no necessarily so.
Putin is deeply morally and legally wrong to have launched an invasion. Ukraine is absolutely right to fight for its defense and to defeat Russia. It is good policy for the US / NATO to facilitate that outcome. And yet, I cannot muster enthusiasm for the fight. The invasion should never have happened and that it happened has tripped dominoes that will greatly elevate immediate human suffering and escalate the risk for great global calamity.
Remember, one of the early justifications for Western aid to Ukraine was that Russia was aiming to rebuild the Soviet Union. Maybe that was true ideologically. Militarily it was not true and now we know it isn't true. Russia is weak. And what has happened supports my original thesis that Putin invaded out of desperation. Putin saw the inevitable of Ukraine joining Western Europe and determined the only chance to stop that was to attack and hope the West would react the same as they reacted when Russia retook Crimea and suppressed Georgia from joining NATO.
But why did Putin think he could succeed going after such a prize as Ukraine. For unlike Crimea or Georgia, the West clearly had a stake in Ukraine. Why did Putin think Ukraine would fall? And if Putin did not think Ukraine would be obtainable, would he have invaded?
I offer that Putin's notion for success was triggered by Biden's disastrous pullout of Afghanistan. This sent the signal that Biden, like Trump, was disengaging the US from the international stage. But unlike Trump, Biden didn't care about making the USA look weak. Putin was worried about Trump choosing or being forced to retaliate harshly against Russian aggression. He did not have this concern with Biden, which was a misread of the situation by Putin.
My greatest concern is the utter lack of prioritization for peace. I appreciate the defense of Ukraine includes the American bravado of "making Russia pay". Vengeance, however good it may feel, will further destabilize international relations.
‘European liberalism’... is an oxymoron as is European democracy. There have been some great liberal thinkers in Europe (Continental), and Europe has voting, but to speak of either as indicating a prevailing ideology and polity of liberalism and democracy is to speak of things that do not nor have ever existed in Europe. Europe has been, since the time of the Romans, one long precession of authoritarian regimes - absolute monarchs, emperors, dictators, revolutionary committees, autocracy, Fascism/Dirigisme, Communism/Socialism - and it’s current state a centralised, technocratic tyranny running a protectionist economic bloc in a manner that would make Mussolini proud. As the German Minister put it, Germany would stick by Ukraine no matter the hardship, no matter what the German voter wants, it’s what the Government says that counts. . How’s that for liberalism and democracy? Backing Ukraine against Russia is like backing Stalin, that erstwhile ‘good guy’ of the war years, against Hitler. As for USA and NATO Governments - not populations - backing Zelensky, as my teacher at primary school used to say, show me your friends and I’ll tell you what you’re like. Those Governments were the same ones in case short term memory has failed, which followed the playbook of the most tyrannical, thuggish, brutal, murderous regime on the Planet... China, so their yap of supporting freedom and democracy and sovereignty - Iraq? Afghanistan? Syria? Libya? is humbug. It shows the low grade intellect of those commentators who seem unaware of the reality in Europe right now, or indeed the hell-in-a-hand-cart USA. The only Western economy left standing? Lucky if it’s left flat on its face.
Looking at all of this from Europe, I have a feeling that the scenarios Zeihan predicted are coming true. Alas, everyone here still seems to believe that this can be undone, that we will return to the pre-2019 and pre-February 2022 world. This was articulated recently by Habermas, who repeated with philosophical pathos the fairytale of a new European unity born out of confrontation with Russia.
Arnold, what probability would you assign to the possibility that the EU will not survive this decade in its current form?