Cisnes negros

Una reciente nota de Patrick Armstrong aparecida en el sitio web Strategic Culture Foundation resume los eventos de los últimos meses y su potencial impacto en el Imperio y sus políticas. Acá va: 


Título: Black Swans Fly In

Texto: A black swan is slang for an unexpected event with large consequences. 2020 has brought us two so far: the COVID-19 pandemic and the collapse of oil prices. Each will have potent consequences for the Imperium Americanum. And there is a nest of black cygnets maturing.


COVID-19

A new infectious disease was noticed in China at the end of last year, identified as a coronavirus in January and a pandemic was declared in March. Since then economic and social life has come to a stop in the West as governments have been convinced to declare shutdowns. Restrictions became widespread in March and April and are still in effect; while some jurisdictions lessen them, others talk about more months. It is not the purpose of this essay to wonder whether these measures were justified or effective, only to state that they happened and that the world economy will have been enfeebled for two to three months or even longer. A big black swan indeed.

The fuller effects won’t be known for some time but one result is certainly that the West’s repudiation for efficiency has taken a huge – perhaps fatal – hit. Only six months earlier, a survey confidently stated that the West – led by the USA and Britain – would do best in dealing with a pandemic. Not so: “We Are Living in a Failed State: The coronavirus didn’t break America. It revealed what was already broken“; “The Death of American Competence“; “The coronavirus is the worst intelligence failure in U.S. history“; “U.S.’s global reputation hits rock-bottom over Trump’s coronavirus response“; ““The world has loved, hated and envied the U.S. Now, for the first time, we pity it”; “Coronavirus: EU could fail over outbreak, warns Italy’s Giuseppe Conte“; “The EU has bungled its response to coronavirus and it might never fully recover“. China can’t hold back its laughter “Chinese state media calls U.S. a ‘primitive society,’ says ‘democracy is dying’ amid coronavirus“. Many of the American pieces, reflecting the abyssal divide in U.S. politics, write as through it were all Trump’s fault. But it wasn’t Trump who didn’t replace PPE stocks used up eleven years ago. Whatever failures are his, the failure is not his alone. And neither are the West’s other deficiencies his doing. No one seems to have stocks of PPE – the easier and most obvious first step against the threat.

Washington deflects its failure by blaming China. But here too it’s lost its competence: here’s U.S. Secretary of State Pompeo asserting at the same time that it’s manmade and that it isn’t:


POMPEO: Look, the best experts so far seem to think it was manmade. I have no reason to disbelieve that at this point.

RADDATZ: Your — your Office of the DNI says the consensus, the scientific consensus was not manmade or genetically modified.

POMPEO: That’s right. I — I — I agree with that. Yes. I’ve — I’ve seen their analysis. I’ve seen the summary that you saw that was released publicly. I have no reason to doubt that that is accurate at this point.


To say nothing of Fauci’s money in the Wuhan lab. China may not even be the point of origin: France has just discovered a case from December and there may be a U.S. case from November. The breathlessly reported Five-Eyes assessment blaming China is fast collapsing: “mostly based on news reports and contained no material from intelligence gathering” says one of the Eyes. Washington may lash its minions into a coffle, but the rest of the world will scorn it as a pitiful attempt to distract. There will be increased rejection of the West’s assumption of competence and veracity. And, in the West itself, more will doubt the words of “experts” (especially those from Imperial College and its professors), “authorities and “trusted media sources”.

Most of the West is still shut down but China is opening. Observers know that China is becoming the world’s top economy – the World Bank had already given it that title in PPP terms in 2013 – and COVID-19 is sure to accelerate the process by giving it a head start out of the economic slowdown. With cheap energy too.

“Soft power” is a useful term that describes the appeal of a given culture to others. For many years this was a potent arrow in the America quiver – I often think of the character played by Gregory Peck in Roman Holiday as the exemplar: open, honest, honourable and modern, but content to be an example and never to take advantage of her. Propaganda, to be sure, but effective propaganda. COVID-19 shows something else: in the simplest terms China has given assistance to many countries and the “U.S. accused of ‘modern piracy’ after diversion of masks meant for Europe“. Piffle like “The United States and President Trump are leading the global effort to combat this pandemic” or “America remains the world’s leading light of humanitarian goodness” just make it more obvious. From the EU we get word salads: reaffirms/recognises/supports/recalls. And only three months ago the “West is winning“. It has be-clowned itself.

Of the downstream effects of the COVID-19 black swan, we can see at least three: great and possibly fatal damage to the assumption of American and Western competence; a widening of the economic gap with China; a further change in the world soft power balance. The “blame China” diversion (not forgetting the rest of the current Enemy Package – Russia and Iran) is childish and will earn disgust. None of these changes is to the benefit of the Imperium Americanum.


Oil

In March Riyadh, on behalf of OPEC, proposed to Moscow that they reduce oil production in order to keep prices up. Moscow refused and Riyadh started pumping. COVID-19 shutdowns collapsed demand. A month later West Texas Intermediate futures went negative and the price of a barrel of oil passed below $20.

Generally it is estimated that the U.S. shale oil industry (about 60% of U.S. production) needs prices of about $60 to be profitable, Saudi Arabia, despite very low pumping costs, squanders so much that it needs about $80; Russia on the other hand is profitable at $45 and has half a trillion dollars in its FOREX kitty. So, if Riyadh started a price war it is not in a strong position; Moscow, on the other hand, some say, can survive $25 a barrel for ten years. As China’s industry comes back on line, it is starting to buy oil but most of it from Russia.

The end result of this price competition in a demand crash is unknown but it is unlikely that the U.S. shale industry will do well out of it. And, because so much of Washington’s behaviour is based on the confidence that it is oil-independent, the U.S. will not come out of this stronger.

So two black swans are likely to leave the Imperium Americanum weaker and less influential. And, it should be said, more contemned. But there is more.


And some black cygnets

Some may remember the excitement of TV commentators about cruise missiles in the Gulf War of 1990. And a weapon that could be launched a thousand kilometres away and hit a particular floor of the building aimed at was pretty amazing. That was the first large-scale public combat use of very long-range precision weapons and for many years cruise missiles were a signature feature of U.S. attacks and practically a monopoly. Until 2015 when Russia struck targets in Syria from otherwise insignificant small craft in the Caspian Sea. So flabbergasted was Washington by this that its first reaction was to pooh-pooh the accuracy. But they were real; many Kalibres have been launched from different platforms including submerged submarines. So, there were now two demonstrated members of the club that could, in real conditions, precisely hit a target a long distance away. In its response to the killing of Soleimani, Iran showed that it too was a member of the club. While it seems some of its missiles did go astray, most hit exactly what they were aimed at. (The U.S. military’s opponents also took note – again – of the fact that it does not have effective air defences). And the usual reaction from Washington: downplaying at first; later we heard of the hundred-plus brain injuries. Quite an achievement for a country that has been under sanctions for decades. And Iran just joined another small club: countries that can launch a satellite on their own (again the U.S. contemptuous dismissal: “tumbling webcam in space“).

The Trump Administration is very hostile towards Iran but no more so than most U.S. Administrations since the departure of the Shah – himself put back into power by a U.S.-UK coup. Probably the hottest moment of this undeclared war was in 1988, but there have been many other crises and we just had another threat from Washington. Tehran knows its on Washington’s hit list and has been preparing for decades. Missiles will be one of its principal defences. Washington would do well to reflect on Iran’s – surprising to it – membership in these two elite clubs before it makes any more threats. Little cygnets become big swans.

Another black cygnet is the Iraq parliament’s demand that U.S. forces leave the country. Washington is consolidating its troops but they will be besieged prisoners if the country rises against them. Which sooner or later it will when the new Prime Minister forms his government. Two consequences of the neocon-dominated “New American Century” in the Middle East have been the growth of Iran’s influence and the demonstration that the U.S. military is not the omnipotent force it thought it was. When the effort to get it out starts, Washington will have three choices: hunker down and hope it goes away, enormously reinforce its troops for a completely new war, withdraw à la Vietnam. This cygnet is growing.


* * *

A pandemic, oil price collapse, a target country showing it has more capability than assumed, threatened expulsion from Iraq. The surprises have exposed long-time weaknesses.

It’s always the unexpected things that test things to destruction.

Para entender

Para entender el mundo en el que vivimos, conviene repasar las fuentes de energía utilizadas por el país que más energía consume en todo el planeta, los EEUU. Al respecto, el cuadro de arriba (correspondiente al año 2019) es instructivo. Con respecto a las fuentes, encontramos tres grupos, a saber:


1. Petróleo y gas natural. Los combustibles fósiles clásicos representan casi el 70% (setenta por ciento) de todos los servicios energéticos del país.

2. Carbón y nuclear. Las fuentes más odiadas, el carbón y la energía nuclear, le siguen con un 20 % del total de energía consumida.

3. Biomasa, solar, eólica, geotérmica e hidroeléctrica no llegan al 11% restante. El ítem "biomasa" es engañoso; el reciclado de basura en el mismo es mínimo. El grueso de la biomasa procesada son bosques nativos de América del Norte.


¿Se entiende la geopolítica del Imperio?

China lanza el yuan digital

China acaba de anunciar que lanza el yuan digital. Analiza las implicaciones de esta movida el ensayista Pepe Escobar para el sitio web Strategic Culture Foundation:


Título: Get Ready for the Next Game-Changer: the Digital Yuan

Texto: A new, radical paradigm shift is in progress. The U.S. economy may shrink as much as 40% in the first semester of 2020. China, already the world’s largest economy by PPP for a few years now, may soon become the world’s largest economy even in exchange rate terms.

The post-Planet Lockdown world – still a hazy mirage – may well need a post-Planet Lockdown currency. And that’s where a serious candidate steps into the fray: the fiat digital yuan.

Last month, the People’s Bank of China (PBOC) confirmed that a group of top banks started trials in electronic payment in four different Chinese regions using the new digital yuan. Yet there’s no timetable yet for the official launch of what is called the Digital Currency Electronic Payment (DCEP).

The man with the plan is PBOC governor Yi Gang. He has confirmed that apart from the trials in Suzhou, Xiong’an, Chengdu and Shenzhen, the PBOC is also testing hypothetical scenarios for the 2022 Winter Olympics.

While DCEP, according to Yi, “has made very good progress,” he insists the PBOC will be “cautious in terms of risk control, especially to study anti money-laundering and ‘know your customer’ requirements to incorporate in the design and system of DCEP.”

DCEP should be interpreted as the road map for China leading to an eventual, even more groundbreaking replacement of the U.S. dollar as the world’s reserve currency. China is already ahead in the digital currency sweepstakes: the sooner DCEP is launched the better to convince the world, especially the Global South, to tag along.

The PBOC is developing the system with four top state-owned banks as well as payment behemoths Tencent and Ant Financial.

A mobile app developed by the Agricultural Bank of China (ABC) is already circulating on WeChat. This is in effect an interface linked to DCEP. Moreover, 19 restaurants and retail establishments including Starbucks, McDonald’s and Subway are part of the pilot testing.

China is advancing fast on the whole digital spectrum. A Blockchain Service Network (BSN) was launched not only for domestic but also for global trade purposes. A large committee is supervising BSN, including executives from the PBOC, Baidu and Tencent, according to the Ministry of Industry and Information Technology (MIIT).


Backed by gold

So what does this all mean?

Well connected banking sources in Hong Kong have told me Beijing is not interested for the yuan to replace the U.S. dollar – for all the interest across the Global South in bypassing it, especially now that the petrodollar is in a coma.

The official Beijing position is that the U.S. dollar should be replaced by an IMF-approved Special Drawing Rights (SDR) basket of currencies (dollar, euro, yuan, yen). That would eliminate the heavy burden of the yuan as the sole reserve currency.

But that may be just a diversionist tactic in an environment of all-out information war. A basket of currencies under the IMF still implies U.S. control – not exactly what China wants.

The meat of the matter is that a digital, sovereign yuan may be backed by gold. That’s not confirmed – yet. Gold could serve as a direct back up; to back bonds; or just lay there as collateral. What’s certain is that once Beijing announces a digital currency backed by gold, it will be like the U.S. dollar being struck by lightning.

Under this new framework, nations won’t need to export more to China than they import so they have enough yuan to trade. And Beijing won’t have to keep printing yuan electronically – and artificially, as in the case of the U.S. dollar – to meet trade demands.

The digital yuan will be effectively backed up by the massive amount of Made in China goods and services – and not by a transoceanic Empire of 800 Bases. And the value of the digital yuan will be decided by the market – as it happens with bitcoin.

This whole process has been years in the making, part of serious discussions started already in the late 2000s inside BRICS summit meetings, especially by Russia and China – the core strategic partnership inside the BRICS.

Considering multiple strategies to progressively bypass the U.S. dollar, starting with bilateral trade in their own currencies, Russia and China, for instance, set up a Russia-Chian RMB Cooperation Fund three years ago.

Beijing’s strategy is carefully calibrated, like playing go long-term. Apart from methodically stockpiling gold in massive quantities (just like Russia) for seven years now, Beijing has been campaigning for a wider use of SDR while making sure to not position the yuan as a strategic competitor.

But now the post-Planet Lockdown environment is shaping up as ideal for Beijing to make a move. Even before the onset of the Covid-19 crisis the predominant feeling among the leadership was that China is under a full spectrum attack by the United States government. Hybrid War already reaching fever pitch implies bilateral relations will only get worse, not better.

So when we have China as the world’s largest economy by both PPP and exchange rate; still the strongest growing major economy, barring the first semester of 2020; productive, innovative, efficient and on track to reach a higher technological level with the Made in China 2025 program; and capable of winning the “people’s war” against Covid-19 in record time, all the necessary elements seem to be in place.

But then, there’s soft power. Beijing needs to have the Global South on its side. The United States government knows it very well; no wonder the current hysteria is all about demonizing China as “guilty” on all – unproved – counts of fostering and lying about Covid-19.


An “impeding arrival”

A key advantage of a sovereign digital yuan is that Beijing does not need to float a paper yuan – which by the way is being sidelined all across China itself, as virtually everyone is switching to electronic payment.

The digital yuan, using blockchain technology, will automatically float – thus bypassing the U.S.-controlled global financialized casino.

The amount of sovereign digital currency is fixed. That in itself eliminates a plague: quantitative easing (QE), as in helicopter money. And that leaves the sovereign digital currency as the preferred medium for trade, with currency transfers unimpeded by geography and, the icing on the cake, without banks charging outrageous fees as intermediaries.

Of course there will be pushback. As in non-stop demonization of neo-Orwellian China for straying away from the whole purpose of bitcoin and cryptocurrencies – which is to have freedom from a centralized structure via decentralized ownership. There will be howls of horror at the PBOC potentially capable of seizing anyone’s digital funds or turning off a wallet if the owner displeases the CCP.

China is on it, but the U.S., UK, Russia and India are also on their way to launch their own crypto-currencies. For obvious reasons, the Bank of International Settlements (BIS), the Central Bank of Central Banks, is very much aware that the future is now. Their research with over 50 Central Banks is unmistakable: we are facing an “impeding arrival”. But who will take the Biggest Prize?