Make no question about it – despite what the “data” shows and what the Fed says – the job market is, in fact, softening.
We’ve spent the last two weeks writing about how Wall Street firms are going to be cutting their bonus pools significantly, with higher rates throwing a wet blanket over dealmaking and earnings for many firms.
Now, it looks as though the layoffs on Wall Street are hitting high gear. Not one to be last or least decisive to act, Goldman Sachs announced this week that it is going to lay off as many as 4,000 of its employees, according to Semafor and Reuters on Friday morning.
Other Wall Street firms like Citigroup have also announced some cutbacks in staffing, but none as meaningful as Goldman’s cuts. The company’s managers are being “asked to identify low performers for what could be a cut of up to 8% to its workforce early next year”, the Semafor report said this morning.
The move is meaningful even when compared to Goldman’s usual lightening of its workforce, which includes between 2% and 5% of employees either being laid off or receiving no bonuses as part of efforts to trim the business.
Reuters reported Friday morning that Goldman’s headcount, even after the layoffs, will still remain above pre-pandemic levels.
Goldman didn’t partake in its routine cuts in 2020 and 2021 due to the pandemic – and then the ensuing boom that followed.
“…the firm has clearly overspent and over-hired, acting more like a tech company being cheered on by venture capitalists than a Wall Street bank bearing the scars of past crises of overexuberance. [CEO David] Solomon is now moving to stem those losses,” wrote Semafor’s Liz Hoffman.
Recall, just days ago we noted that Goldman was curtailing originating unsecured consumer loans. The move marks a noticeable pivot from the bank’s previous plans of trying to get closer to retail banking, which they were doing through their Marcus offering, which provided services like personal loans and high yield savings, similar to combining the features of lenders like Sofi and Upstart with the savings products from companies like Capital One.
But that experiment looks to be on its last legs. Goldman hasn’t officially commented on the report yet but the bank has been in the midst of cost cutting measures for several months. As we noted then, Goldman was one of the first banks to announce layoffs this season.
Recall, in 2018, we explained how Goldman Sachs had switched from betting against Subprime (Residential Mortgage Backed Securities and their various synthetic and “squared” derivatives) to betting with Subprime (hoping to profit off America’s sub-660 FICO population by lending to it).
The Economist has interviewed the three Ukrainian leaders who manage the war in Ukraine. It summarizes them in an interpretive writeup. I will use that to extract the important points.
The writeup is of course full of propaganda but one can still glean some information from it.
The first interview (transcript) was with Volodymyr Zelensky, Ukraine’s president, who is saying nothing new that would be of interest:
“People do not want to compromise on territory,” he says, warning that allowing the conflict to be “frozen” with any Ukrainian land in Russian hands would simply embolden Mr Putin. “And that is why it is very important…to go to our borders from 1991.”
Zelensky wants Crimea back. Good luck achieving that impossibility one might say.
The second interview is with General Valery Zaluzhny, Commander-in-Chief of the Armed Forces of Ukraine. The third interview is with Colonel-General Oleksandr Syrsky, the head of Ukraine’s ground forces.
All three men emphasised that the outcome of the war hinges on the next few months. They are convinced that Russia is readying another big offensive, to begin as soon as January.
The author writes that “Ukraine enjoyed a triumphant autumn.” One wonders how many thousand Ukrainian soldiers have died for that triumph that was in reality a well controlled Russian retreat to shorten its frontlines.
But neither General Zaluzhny nor General Syrsky sounds triumphant. One reason is the escalating air war. Russia has been pounding Ukraine’s power stations and grid with drones and missiles almost every week since October, causing long and frequent blackouts. Though Russia is running short of precision-guided missiles, in recent weeks it is thought to have offered Iran fighter jets and helicopters in exchange for thousands of drones and, perhaps, ballistic missiles.
“It seems to me we are on the edge,” warns General Zaluzhny. More big attacks could completely disable the grid. “That is when soldiers’ wives and children start freezing,” he says. “What kind of mood will the fighters be in? Without water, light and heat, can we talk about preparing reserves to keep fighting?”
When it is cold and dark morale indeed becomes a problem. It is not the only one.
A second challenge is the fighting currently under way in Donbas, most notably around the town of Bakhmut. General Syrsky, who arrives at the interview in eastern Ukraine in fatigues, his face puffy from sleep deprivation, says that Russia’s tactics there have changed under the command of Sergei Surovikin, who took charge in October. The Wagner group, a mercenary outfit that is better equipped than Russia’s regular army, fights in the first echelon. Troops from the Russian republic of Chechnya and other regulars are in the rear. But whereas these forces once fought separately, today they co-operate in detachments of 900 soldiers or more, moving largely on foot.
Bakhmut is not an especially strategic location. Although it lies on the road to Slovyansk and Kramatorsk, two biggish cities (see map), Ukraine has several more defensive lines to fall back on in that direction. What is more, Russia lacks the manpower to exploit a breakthrough. The point of its relentless onslaught on Bakhmut, the generals believe, is to pin down or “fix” Ukrainian units so that they cannot be used to bolster offensives in Luhansk province to the north. “Now the enemy is trying to seize the initiative from us,” says General Syrsky. “He is trying to force us to go completely on the defensive.”
If Bakhmut is not a strategic location why is the Ukrainian army sending more and more troops into it? Russia is using Bakhmut not only to “fix” Ukrainian units. It is using it to eliminate them with up to 500 Ukrainian soldiers killed or wounded per day. The real fixing operation is happening elsewhere.
Ukraine also faces a renewed threat from Belarus, which began big military exercises in the summer and more recently updated its draft register. On December 3rd Sergei Shoigu, Russia’s defence minister, visited Minsk, the Belarusian capital, to discuss military co-operation. Western officials say that Belarus has probably given too much material support to Russian units to enter the fray itself, but the aim of this activity is probably to fix Ukrainian forces in the north, in case Kyiv is attacked again, and so prevent them from being used in any new offensive.
General Zaluzhny has a quite realistic view on what is coming:
“Russian mobilisation has worked,” says General Zaluzhny. “A tsar tells them to go to war, and they go to war.” General Syrsky agrees: “The enemy shouldn’t be discounted. They are not weak…and they have very great potential in terms of manpower.” He gives the example of how Russian recruits, equipped only with small arms, successfully slowed down Ukrainian attacks in Kreminna and Svatove in Luhansk province—though the autumn mud helped. Mobilisation has also allowed Russia to rotate its forces on and off the front lines more frequently, he says, allowing them to rest and recuperate. “In this regard, they have an advantage.”
But the main reason Russia has dragooned so many young men, the generals believe, is to go back on the offensive for the first time since its bid to overrun Donbas fizzled out in the summer. “Just as in [the second world war]…somewhere beyond the Urals they are preparing new resources,” says General Zaluzhny, referring to the Soviet decision to move the defence industry east, beyond the range of Nazi bombers. “They are 100% being prepared.” A major Russian attack could come “in February, at best in March and at worst at the end of January”, he says. And it could come anywhere, he warns: in Donbas, where Mr Putin is eager to capture the remainder of Donetsk province; in the south, towards the city of Dnipro; even towards Kyiv itself. In fact a fresh assault on the capital is inevitable, he reckons: “I have no doubt they will have another go at Kyiv.”
The general is building and holding back reserves which is problematic for the front lines:
The temptation is to send in reserves. A wiser strategy is to hold them back. … “May the soldiers in the trenches forgive me,” says General Zaluzhny. “It’s more important to focus on the accumulation of resources right now for the more protracted and heavier battles that may begin next year.”
Ukraine has enough men under arms—more than 700,000 in uniform, in one form or another, of whom more than 200,000 are trained for combat. But materiel is in short supply. Ammunition is crucial, says General Syrsky. “Artillery plays a decisive role in this war,” he notes. “Therefore, everything really depends on the amount of supplies, and this determines the success of the battle in many cases.” General Zaluzhny, who is raising a new army corps, reels off a wishlist. “I know that I can beat this enemy,” he says. “But I need resources. I need 300 tanks, 600-700 IFVs [infantry fighting vehicles], 500 Howitzers.” The incremental arsenal he is seeking is bigger than the total armoured forces of most European armies.
Does Zaluzhny really believe that he could get that force? I don’t think so.
The Economist points out that donors of weapons have run out of pretty much everything:
On December 6th America’s Congress agreed in principle to let the Pentagon buy 864,000 rounds of 155mm artillery shells, more than 12,000 GPS-guided Excalibur shells and 106,000 GPS-guided GMLRS rockets for HIMARS—theoretically enough to sustain Ukraine’s most intense rate of fire for five months non-stop. But this will be produced over a number of years, not in time for a spring offensive.
Russia has similar problems. It will run out of “fully serviceable” munitions early next year, says an American official, forcing it to use badly maintained stocks and suppliers like North Korea. Its shell shortages are “critical”, said Admiral Tony Radakin, Britain’s defence chief, on September 14th.
The last part is of course as valid as the claim that Russia is ‘running out of missiles’.
But even while lacking armored forces and ammunition Ukraine still dreams of big attacks:
“With this kind of resource I can’t conduct new big operations, even though we are working on one right now,” says General Zaluzhny.
The writer discusses various options where Ukraine could attack but finds that it does not really have a good one. The big victory over Russia will not be coming:
In private, however, Ukrainian and Western officials admit there may be other outcomes. “We can and should take a lot more territory,” General Zaluzhny insists. But he obliquely acknowledges the possibility that Russian advances might prove stronger than expected, or Ukrainian ones weaker, by saying, “It is not yet time to appeal to Ukrainian soldiers in the way that Mannerheim appealed to Finnish soldiers.” He is referring to a speech which Finland’s top general delivered to troops in 1940 after a harsh peace deal which ceded land to the Soviet Union.
So how many soldiers will still have to die before Zaluzhny is willing to give his Mannerheim speech (vid)? He does not say.
He will probably have to hold his speech sooner than he thinks because the Ukrainian economy has broken down. GDP decreased by 33% this year and, as attacks on the electrical net continue, it will shrink by another 5 or 10% next year. Inflation is above 20%, unemployment above 30%. The big metal and mining industries had to shut down as they depend on uninterrupted electricity supplies. Meanwhile donors are unwilling to hand to Ukraine the budget it claims to need.
It seems possible that the pending bankruptcy of Ukraine may indeed end the war earlier than any military action.
Xi Jinping’s Visit to Saudi Arabia and the overthrow of Atlanticism
The historic China-Arab Summit currently underway in Riyadh symbolizes the emerging Eurasianism in the Persian Gulf.
As Atlanticists continue their commitment to a future shaped by energy scarcity, food scarcity, and war with their nuclear-capable neighbors, most states in the Persian Gulf that have long been trusted allies of the west have quickly come to realize that their interests are best assured by cooperating with Eurasian states like China and Russia who don’t think in those zero-sum terms.
With Chinese President Xi Jinping’s long-awaited three-day visit to Saudi Arabia, a powerful shift by the Persian Gulf’s most strategic Arab state toward the multipolar alliance is being consolidated. Depending on which side of the ideological fence you sit on, this consolidation is being viewed closely with great hope or rage.
Xi’s visit stands in stark contrast to US President Joe Biden’s underwhelming ‘fist bump’ meeting this summer, which saw the self-professed leader of the free world falling asleep at a conference table and demanding more Saudi oil production while offering nothing durable in return.
In contrast, Xi’s arrival was greeted by a multi-cannon salute and Saudi jets painting the red and yellow colors of China’s flag in the skies over Riyadh. Beijing’s delegation of political and business elites, in the following days, will continue to meet with Saudi counterparts to strike long-term strategic deals in cultural, economic and scientific domains.
The visit will culminate in the first ever China-Arab Summit on Friday, 9 December, where Xi will meet with 30 heads of state. The Chinese foreign ministry described this as “an epoch-making milestone in the history of the development of China-Arab relations.”
While $30 billion in deals will be signed between Beijing and Riyadh, something much bigger is at play which too few have come to properly appreciate.
Riyadh’s steps toward the BRI since 2016
Xi Jinping last visited the kingdom in 2016, to advance Riyadh’s participation in China’s newly unveiled Belt and Road Initiative (BRI). A January 2016 policy report by the Chinese government to all Arab states reads:
“In the process of jointly pursuing the Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, China is willing to coordinate development strategies with Arab states, put into play each other’s advantages and potentials, promote international production capacity cooperation and enhance cooperation in the fields of infrastructure construction, trade and investment facilitation, nuclear power, space satellite, new energy, agriculture and finance, so as to achieve common progress and development and benefit our two peoples.”
It was only three months later that Crown Prince Mohammed bin Salman (MbS) inaugurated Saudi Vision 2030 which firmly outlined a new foreign policy agenda much more compatible with China’s “peaceful development” spirit.
After decades serving as an Atlanticist client state with no viable manufacturing prospects or autonomy beyond its role in supporting western-managed terror operations, Saudi Vision 2030 demonstrated the first signs of creative thinking in years, with an outlook toward a post-oil age.
On the energy front, China Energy Corp is building a sprawling 2.6 GW solar power station in Saudi Arabia, and Chinese nuclear developers are helping Riyadh develop its vast uranium resources while also mastering all branches of the nuclear fuel cycle.
In 2016, both nations signed an MoU to build fourth generation gas-cooled nuclear reactors. This follows the UAE’s recent leap into the 21st century with 2.7 GW of energy now constructed.
By early 2017, Riyadh had firmly bought its ticket on the New Silk Road with a $65 billion agreement integrating the Saudi Vision 2030 and BRI with a focus on petrochemical integration, engineering, refining, procurement, construction, carbon capture, and upstream/downstream development.
In the new post-American epoch, signs of this spirit of cooperation and bridge building have increasingly come to be felt, even while its effects have been forcibly restrained – as millions of Yemenis suffering under seven years of war can testify.
Unlike the Atlanticist fixation on Green New Deals which threaten to annihilate industry and farming, Riyadh’s post-oil outlook is much more synergistic with China’s idea of “sustained growth” that demands nuclear power, continued hydrocarbons, and robust agro-industrial development.
China’s trade with Saudi Arabia rose to $87.3 billion in 2021, which saw a 39 percent increase over 2020, while US-Saudi trade has collapsed from $76 billion in 2012 to only $29 billion in 2021.
Some of this Beijing-Riyadh trade may now be conducted in the Chinese Yuan, which will only undermine the US-Saudi relationship further.
In the first 10 months of 2022, China’s imports from Saudi Arabia were $57 billion and exports to the kingdom rose to $30.3 billion. China is additionally building 5G systems and cultivating a vast technology hub with a focus on selling electronic goods, all while helping Saudi Arabia build up an indigenous manufacturing sector.
A trend of Harmonization
Despite the continued chaos in Yemen, and economic devastation in Lebanon, Syria, and Iraq, Beijing’s subtle trend has nonetheless been one of healing with Saudi Arabia – and regional power Turkiye.
Saudi Arabia and Turkiye have often acted as rivals, and front two distinct foreign agendas with broad regional ambitions that overlap on many fronts. But despite this competitive past, higher necessities have induced both nations to harmonize their foreign policy outlooks with a new “look east” focus.
This was expressed during the Saudi crown prince’s visit to Ankara in June 2022 where the two heads of state called for “a new era of cooperation” with a focus on political, economic, military and cultural cooperation outlined in a joint communique.
Only days after MbS’s return from Turkiye, then-Iraqi Prime Minister Mustafa al-Kadhimi visited Jeddah to promote regional stability stating in a press release “they changed points of view on a number of issues that would contribute to supporting and strengthening regional security and stability.”
Iraq and Saudi Arabia had only re-established diplomatic ties in November 2020 due to Saddam Hussein’s invasion of Kuwait 30 years earlier.
Between 2021-2022, Iraq had worked hard to host bilateral talks between Saudi Arabia and Iran with five rounds of talks held and Kadhimi stating his belief that “reconciliation is near.” Tehran-Riyadh diplomatic ties were cut in the aftermath of the 2016 execution of outspoken Saudi Shiite cleric Nimr al-Nimr, prompting the storming of the Saudi embassy in Tehran by angry protestors.
In March 2022, MbS stated that Iran and Saudi Arabia “were neighbors forever” and stated that it is “better for both of us to working it out and to look for ways in which we can co-exist.”
By August 23, 2022, the UAE and Kuwait created a new milestone by restarting diplomatic relations with Iran. And although nearly every Persian Gulf state (plus Turkiye) had devoted years to supporting regime change in Syria, a new reality has imposed itself with all Arab parties veering toward the Chinese BRI model of regional integration and economic development.
The Key Role of Iran
Not only is Iran a key player in the Greater Eurasian Partnership serving as a strategic hub for the southern route of China’s BRI, but it is also a keystone of the Russia-Iran-India-led International North South Transportation Corridor (INSTC) which has become a major force synergizing with the BRI.
Iraq and Iran themselves are in the final stages of building the long-awaited Shalamcheh-Basra railway which will unite the two nations by rail for the first time in decades while also offering a potential extension to the already existent 1500 km railway through Iraq to Syria’s border.
The climate for cooperation was undoubtedly made possible by the presence of Chinese economic diplomacy which established a 25 year, $400 billion energy and security deal with Iran – but also Russia, whose similar but smaller $25 billion, twenty-year deal with Tehran may easily expand to $40 billion in Russian investments in Iran’s vast oil and natural gas fields in the coming years.
Saudi Arabia and Russia’s relationship with OPEC+ demonstrated its potency this summer when Riyadh won the ire of Washington by not only denying Biden’s requests for increased oil production, but cutting overall oil production and driving up global prices of oil. Saudi Arabia benefited by vastly increased imports of discounted Russian oil which were then sold to a desperate Europe.
Furthermore, Saudi plans to join the global hub of multipolarity itself, BRICS+ (alongside Turkiye, Egypt, and Algeria), in addition to recently becoming a full-fledged Shanghai Cooperation Organization (SCO) dialogue partner, have placed its destiny ever deeper into the growing Multipolar Alliance.
With the increased potential for stability and harmonization of interests across various power blocs, an atmosphere more conducive to long-term economic investments is finally presenting itself to Chinese investors who had long looked upon conflict-ridden West Asia with justifiable trepidation.
In August 2022, the Saudi state oil company Aramco and China’s Petroleum and Chemical Corporation Ltd signed an MOU expanding on the aforementioned $65 billion cooperation deal of 2017, which involves the construction of Fujian Refining and Petrochemical Company (FREP) and Sinopec Senmei Petroleum Company (SSPC) in Fujian, China, and Yanbu Aramco Sinopec Refining Company (YASREF) in Saudi Arabia.
Rail and interconnectivity
Perhaps most exciting are prospects for interconnectivity that play directly into the development corridors tied to the BRI. In Saudi Arabia, this train has moved steadily apace with the 450 km high speed Haramain Railway built by China Railway Construction Company connecting Mecca to Medina completed in 2018.
Photo Credit: The Cradle
Discussions are well underway to extend this line to the 2400 km North South Railway from Riyadh to Al Haditha completed in 2015. Meanwhile, 460 km of rail connecting all Gulf Cooperation Council (GCC) members is currently under construction, which is driving reforms in engineering, trade schools, and manufacturing hubs across the Arabian Peninsula.
In 2021, all GCC states gave their full support to a $200 billion Persian Gulf-Red Sea high speed railway dubbed “The Saudi Landbridge,” which also dovetails another $500 billion megaproject with vast Chinese investments, dubbed the futuristic NEOM mega-city on the Red Sea.
The Eurasianists stand to gain
It can only be hoped that this new chemistry of harmonization and win-win cooperation may soon provide a key to ending the fires of conflict in Yemen and other regional states.
Further, with Russia and China both helping to broker diplomatic backchannels, and with Iran playing an active role within this process, perhaps negotiations for reconstruction can begin in this war-torn zone of conflict.
It is not an extreme stretch of the imagination to see the new Persian Gulf-Red Sea rail project extending north into Egypt and south into Yemen.
Looking at a map of the region, one can imagine the reactivation of the “Bridge of the Horn of Africa” first unveiled in 2009, that would have extended rail across the 25 km Bab el Mandeb strait connecting pipelines and rail lines into Djibouti and East Africa, more broadly.
While a western-manipulated Arab Spring derailed that concept in 2011, and the Saudi war against Yemen drove it further under ground since 2015, perhaps this new spirit of inter-civilizational cooperation under a new economic architecture liberated from the Atlanticist-dominated dollar system may provide just what it takes to revive the idea once again.
For the first time, a gunfire erupted directly between Russian mercenaries (PMC Wagner) and NATO mercenaries (American PMC Mozart) who were on patrol in Bakhmut. Suddenly they came across a group of Russian soldiers in a heavily fortified trench system supported by T-90 tanks.
Russian media sources on December 8, 2022, indicating a full confrontation was recorded in the outskirts of the city, instead of strengthening the Ukrainian defenses PMC Mozart troops were ambushed and made the choice to withdraw in armed clashes.
EU crude imports from Russia are set to plunge after the import ban of seaborne crude oil on December 5th.
Oil production growth in the U.S. is flattening for a number of reasons.
U.S. crude exports to the EU can only replace a small portion of Russian/OPEC crude.
OPEC+ yesterday decided to leave its production quotas where they are, at 2 million bpd lower than they were in October, which is an effective cut of 1 million bpd of production. Three days earlier, the European Union reached an agreement to set a price cap on Russian crude oil at $60 per barrel—lower than market prices but not as low as some EU members, such as Poland and Estonia, would have liked the cap to be.
Russia responded by reiterating that it will not sell oil to countries enforcing a price cap. According to Reuters, a decree to that effect is already being prepared.
Amid all this, U.S. oil production growth is slowing down. The shale revolution, as we knew it until a few years ago, is no longer in full-growth mode. And it may never return to it.
On the face of it, all looks good. U.S. output has rebounded from a low of 9.7 million bpd, which was recorded in May 2020, to 12.3 million bpd this September, Reuters’ John Kemp wrote last week, noting that this year’s high was still below the pre-pandemic record of 13 million bpd, hit in late 2019.
What’s more, oil production in the country was not rising steadily. For two of the last seven months, it has actually declined, according to EIA data. And the rate of growth when it grew was half the growth rate recorded during the boom years in U.S. shale.
There are numerous reasons for this slowdown, driven, like output growth, by the shale patch. In many parts of the patch, for instance, drillers are running out of so-called sweet spots—low-cost acreage that has driven much of the shale boom.
Yet oil companies are also rearranging their priorities under an administration that is much less favorable to their industry than previous ones. Returning cash to shareholders has become priority number one, replacing production growth.
There have also been lingering problems from the pandemic lockdowns, such as shortages of things like frac sand and steel tubing, as well as a labor shortage. On top of all that, the industry has had to deal with the same inflation that has hit all other industries, pushing costs up by some 20 percent.
All this means that as it curbs its own supply of Russian oil with the price cap and its oil embargo on the commodity, the European Union cannot really rely on higher oil imports from the United States as it has relied on stronger gas imports.
The outlook is not very encouraging, either. According to a Reuters report from last week, spending in the shale oil industry in the U.S. is far from what it was during the boom years.
The report cited numbers for research and engineering spending at Schlumberger, for instance, now renamed SLB, which fell to 2.3 percent of revenues in the nine months to September.
It also said another large player in the industry, Helmerich & Payne, only planned to increase its R&D spend by $1 million for next year this year’s level, and cited Morgan Stanley analysts as saying that spending on new production was “modest at best”.
“Shale can’t come back to become a swing producer,” said the former head of Parsley Energy, Bryan Sheffield, echoing a very similar statement by Hess Corp.’s John Hess that he made last month.
“Shale was thought of as a swing producer, the Saudis and the OPEC have waited this out. Now, really OPEC is back in the driver’s seat where they are the swing producer,” Hess said at an investor conference.
He was quoted in a Reuters report that also cited other industry executives complaining about lower-than-expected well productivity and a substantially revised production growth forecast for 2021 by the EIA.
Hess went even further, warning that some companies in the shale patch only had a decade or so of life left in them and that “A lot of companies have already hit the wall,” missing their production and investment targets.
Meanwhile, the EU has become the biggest export market for U.S. crude oil, taking in more than Asia since the start of the year, Bloomberg reported in July, in a repeat of the redirection of natural gas flows.
But with U.S. oil output growth on the wane, if OPEC is back in the driving seat, that’s even worse news for Europe than the production growth slowdown in the United States. OPEC has signaled repeatedly in recent months that it has its own agenda, and it is not the same as the EU’s agenda.
On the contrary, the two agendas are very much at odds with the EU’s transition plans and OPEC’s plans to continue marketing hydrocarbons for as long as possible. In the immediate term, however, the two groups’ interests are aligned: the EU will need more oil from OPEC, and OPEC will probably be only too happy to supply it. At market prices, of course.
In late August there appeared a smaller army based on NATO training, equipment, and the cream of the AFU mobilization crop — plus several thousand “foreign volunteers” — including at least hundreds of Americans.
It has now emerged the Poles have already lost ~5000 casualties on Ukrainian battlefields. The current Polish government will almost certainly not survive this debacle. There are at least hundreds more from other countries, including the US.
In this article I examine the current state of the fight for hegemonic control between America on the one side, and Russia and China on the other. It is being fought on two fronts. Ukraine, the one in plain sight, is about to endure a winter without power and adequate food potentially leading to a humanitarian crisis.
The other front is financial with America facing a coordinated attack by Russia and China on its dollar hegemony. The Russians are planning a replacement trade settlement currency, which if it succeeds, could unleash a flood of foreign-owned dollars onto the foreign exchanges.
We have no way of knowing how advanced this plan is, but the indications point perhaps to a gold-based digital currency. Moscow establishing a new gold exchange, Asian central banks accumulating additional gold reserves, and Saudi Arabia seeking non-dollar payments for oil sales are all circumstantial evidence.
As well as these plans, there has been an underlying shift away from a long-term everything financial bubble, with the prospect of higher interest rate levels in time. The reasons for foreign ownership of fiat dollars are diminishing, and a successful new Asian trade currency will only add to the dollar’s woes.
Could this pressure compel America de-escalate Ukraine and sanctions against Russia? The argument to do so has become compelling. It is also a way to lower energy prices, giving central banks needed room for interest rate manoeuvre.
Russia is making the most of winter
The evidence that Russia is intent on breaking the will of the Ukrainian people is mounting. As the snow begins to settle, Russia is knocking out the power generation necessary to keep people warm and alive. It is a modern variation on the medieval siege. But instead of surrounding a city or castle and starving the residents into submission, by making conditions impossible they expect the Ukrainians to leave.
Nearly eighty per cent of that unfortunate country’s population is Ukrainian, as opposed to Russian. But that is based on officially recognised national boundaries and is not adjusted for the regions Russia gained in the East, including Crimea, in 2014 and subsequently. That leaves a potential refugee problem of 34 million Ukrainians fleeing impossible energy-starved living conditions with scarce food as the cruel winter grinds on.
It takes two sides to make a proxy war. You wouldn’t believe it from the western media, but Putin has been careful to not escalate the situation into an official war and drawing NATO into direct confrontation. Instead, he is using the Ukrainian constitution which protects ethnic Ukrainians, but not minorities including Russian speakers. Effectively, they are denied human rights and gives Putin the excuse to rescue them.
This legal ethnicity in Ukraine’s constitution is unusual today, a feature shared with Nazi Germany. It allows the Russian propaganda machine to accuse the Ukrainian regime of being a Nazi state. Russia’s “special operations” were to rescue ethnic Russians in accordance with international law and explains why they have offered them Russian passports and safe passage from the Donbas and Kherson. Following acts such as the car bomb in Moscow which killed Darya Dugina, the daughter of a prominent Putin ally, and the bombing of the Kerch bridge Putin has accused Ukraine of terrorist acts for which Russia seeks retribution. Again, anti-terrorist activity is a device to avoid a declaration of war while justifying further action.
As the winter progresses, 34 million Ukrainians will therefore face the choice of becoming refuges or dying of cold and starvation. Now that the snow has arrived, the Russians have started targeting Ukraine’s energy supplies. The timing is no accident and the EU’s leaders can now envisage the likely consequences. But in relying on NATO for their ultimate protection, the Brussels establishment does not see Nato’s policy changes as its responsibility and so by going along with American’s leadership they have neglected their own interests.
But the Americans now appear to understand the looming danger of winter with no power. Doubtless, this is what led William Burns, the CIA’s director to meet his opposite Russian intelligence chief in Ankara two weeks ago. The official story was that Burns was there to warn the Russians not to resort to nuclear weapons and to raise the issue of US prisoners.[i] But there is little doubt that this back-channel meeting was to explore compromises before America finds itself a party to the cruel sacrifice of the Ukrainian population in a proxy war.
Negotiations will not be a slam dunk
In the great game of geopolitical strategy, bringing the Americans to the negotiating table can be chalked up as a win for the Russians. But it is not just about a proxy war on Ukrainian soil. Both Russia and America have overriding objectives. The Russians want to secure their western borders, which means American military withdrawal from all border nations at the least — Lavrov has mentioned 300 miles being the missile range. The US will undoubtedly resist these demands, because to give up effectively on its post-war role as the protector of Europe through NATO would be an open admission of defeat on the world stage. It would mean the end of US global hegemony, which the Americans are desperately clinging on to. Furthermore, it is a defeat that would enhance Russia’s power not just in the Western European arena, but through its partnership with China over the entire Eurasian continent.
From the US’s point of view, negotiations with Russia will probably turn out to be an exercise in damage limitation — like the withdrawal from Afghanistan. She needs to get to the table before the situation deteriorates much further. And other than the Ukraine situation they have three pressing problems to consider:
There is little doubt that the EU’s troubles will escalate this winter, with energy shortages, exorbitant food prices, and rocketing production cost likely to be the most severe test the EU has ever had to deal with. It comes at a time when the euro system faces instability which could take down major banks and expose the euro system itself as insolvent. Systemic risk would then almost certainly translate into an existential threat to the US banking system.
The US is fighting not one but two new hegemons in Russia and China which have teamed up to form a new Asian-based world order with commodity and raw material suppliers worldwide. Purely on a population basis, a rapidly industrialising Asia with its associated interests in the Shanghai Cooperation Organisation, the Eurasian Economic Union, BRICS, the whole of Africa and large swathes of South America outnumber the North Americans, NATO members, Japan, South Korea, and some less certain US allies by at least six to one.
The core of this Chinese-Russian partnership is determined to dispose of the dollar for trade settlement as far as possible. As one of the two parties behind the creation of the petrodollar, the Saudis are realigning themselves with the Asian trade bloc. Further moves in this direction are sure to undermine the dollar’s hegemony, the principal source of America’s power over other nations.
The EU dimension
You can tell that dissention is now evident in the EU, with the EU accusing the Americans of profiteering from the Ukraine war. This was from Politico earlier this week:
“The fact is, if you look at it soberly, the country that is most profiting from this war is the U.S. because they are selling more gas and at higher prices, and because they are selling more weapons,” one senior official told POLITICO.[ii]
The article goes on:
“The explosive comments — backed in public and private by officials, diplomats, and ministers elsewhere — follow mounting anger in Europe over American subsidies that threaten to wreck European industry. The Kremlin is likely to welcome the poisoning of the atmosphere among Western allies. ‘We are really at a historic juncture,’ the senior EU official said, arguing that the double hit of trade disruption from U.S. subsidies and high energy prices risks turning public opinion against both the war effort and the transatlantic alliance. ‘America needs to realize that public opinion is shifting in many EU countries.’”
Realistically, America can only keep its principal EU allies on side if it addresses these concerns. Attributed almost entirely to sanctions against Russia at America’s behest and to Putin’s reactions to them, rising prices are creating political pressures on the ground likely to force politicians to seek an early end to sanctions. In this respect, time is on Russia’s side.
But it is not just in the EU that these pressures have arisen. The new global trend of rising prices is affecting the EU more than most, the European Central Bank having held its deposit rates in negative territory for a considerable period of time. Like other central bankers, ECB officials failed to plan for an exit route from interest rate suppression and are more badly wrong-footed than most central banks. It was a policy which encouraged commercial banks into risky territory.
Compressed lending margins forced major commercial banks to maintain profits by leveraging their balance sheets to record levels. The dead hand of negative rates, amounting to a tax on reserves held within the euro system was a burden on banks’ performance. While the increase in rates has initially been a profit bonanza for the banks, they are now exposed to losses from declining asset values and non-performing loans. And with the ECB’s deposit rate still only 1.5% when official price inflation is running at over 10%, far higher interest rates are inevitable. Unless somehow price inflation can be brought down significantly, the consequences will be to create huge losses for the banks from financial assets both on-balance sheet and in the form of collateral — losses that will wipe out shareholders’ capital.
The inflation problem is now manifest in an energy crisis arising from sanctions against Russia. To prevent the entire euro system being destabilised, the obvious short-term solution is to treaty with Russia. The removal of this source of rising prices would in turn reduce the outlook for euro interest rates, stabilising the entire euro system. We can be sure that the ECB and its network of national central banks will be pointing this out to their politicians.
Indeed, an ending of the sanctions would give stock markets and bond prices an almighty boost, at a time of growing concerns over a global recession. Let there be no doubt: the west’s policies against Russia are nothing short of suicidal. And politicians in Brussels would be blind not to see it.
The conflict between the US and the two Asian hegemons is escalating
From Russia’s point of view, America’s precipitative withdrawal from Afghanistan and the replacement of an unpredictable President Trump with an aging Biden, known to the Russians through his background in US foreign affairs, confirmed that America’s global influence was failing. For Russia, with Britain out of the EU it was a good time to escalate tensions between America and Western Europe to side-line America from Europe.
Putin has shown high level skills as a political operator — he had to have them in order to successfully navigate his way through the mess left by Yeltsin to a position of ultimate power. Before escalating the Ukraine situation, we can be certain he anticipated both American-led sanctions and calculated his response. That the Americans have tentatively signalled that they are now prepared to negotiate confirms the success of Putin’s Ukraine strategy. Now, with the onset of winter he can afford to wait. And the longer he waits, the greater the squeeze on Ukraine and the EU.
America is fighting this power game on two fronts: Russia and China. She cannot be too aggressive against China because the US is still mightily dependent on its economy. The US is resorting to selective technology bans and not much else. Having exported manufacturing supply chains to China and Southeast Asia, large US corporations cannot afford to see their supply chains undermined by aggressive foreign policies. Already, intentionally or not China is putting the squeeze on US corporates with its covid lockdown policy.
We can never be entirely sure of Chinese intensions, particularly with the enigmatic President Xi. With protests at lockdowns, western media portrays Xi’s administration as reverting almost to Maoist policies, a reversal of China’s recent march into capitalism. The treatment of Uyghurs offends us. But reform of covid policies was known to be on its way, and on Tuesday the announcement was made by China’s National Health Commission, giving new guidance to local administrations, which should ease lockdowns.
The underlying problem for China’s government is that its economy is suffering a debt hangover from decades of overinvestment in domestic construction, secured by an exceptionally high savings rate. If the economy was left to its own devices, according to classical theory a debt crisis would destroy malinvestments and reallocate capital to more productive use. But with the large commercial banks under state control the policy will be more likely to ride through the transition of capital reallocation, whatever the cost.
The effect of a credit crunch is to heighten the urgency for state directed investment into other areas, particularly integration with other Asian nations. While we must not forget that there are significant political and cultural differences between China and Russia, American hegemony and trade policies have only served to tighten the bonds between them, so cross-border investment is an obvious priority.
The immediate economic consequences are damaging for China, with an economy which has become ex-growth. While this is a negative factor for the whole region, it could hasten pan-Asian integration to limit economic damage, and to take nations such as India, the Africans and now the entire Middle East further away from US hegemonic control. American allies in Southeast Asia will also be re-examining their foreign policies.
Looking through the immediate prospects for a global recession, we can see that the old world of stagnating economies is being separated from a new world of industrialisation. Independent developing nations are being drawn into the progressive camp, leaving a rump of failing nations living in the past.
So far, a confirmation of the end of US hegemony has been seen in the change of Saudi Arabia’s trade policy, whereby it has realigned itself to Russia and China, confirming its intention to join the BRICS organisation. With other Arab states following the Saudi lead, this confirms that the Gulf states see their future being bound up with the Russian and Chinese partnership. This is likely to be followed by nations in South-East Asia, which at the moment are sitting on the fence. But Indonesia’s recent hosting of the G20 meeting showed that the hosts appeared to be more worried about upsetting the Russians and Chinese than the US-led western alliance.
Member states of the European Union are beginning to face the same dilemma. They have gone along blindly with NATO policies without questioning them. The failure of NATO’s wars in the Middle East and Afghanistan, and the consequences of the overthrow of Libya’s Ghaddafi have all led to Europe’s refugee problems. Now, the economic sacrifice of NATO alignment is plain to see. EU leaders are muttering darkly about how the Americans are profiting from Ukraine while Europe is paying the price.
The dollar’s hegemony is under threat as well
We know from official announcements that the Russian Chinese partnership, specifically through their membership of the Eurasian Economic Union, is planning to cobble together a new trade settlement currency. Due to currency sanctions against Russia, a sense of urgency has been imparted to the project, with other nations in Asia realising that retaining western currencies in their central bank reserves carries risk of sanctions. These risks are not merely restricted to the immobilisation of reserves in western currencies, but also restrict trade. The consequences of sanctions policy have been to force Asian governments to rethink about trade security as well.
At this stage, all we can do is to draw together some threads to determine the likely form of the new trade settlement currency Sergei Glazyev, the senior Russian official tasked with the project has proposed. An official statement dated 16 June from the committee which he chairs included the following statement:
“Sergei Glazyev informed about presenting in the near future the concept for forming the common EAEU exchange market, which, in particular, would involve the unification of exchanges’ information systems and the nomination of prices in national currencies. “The agenda includes the transition to a new stable settlement currency based on a basket of national currencies and exchange-traded products, as well as the creation of our own stable pricing system. Such principles should be applied in work not only within the EAEU but also throughout the SCO,” the EEC Minister concluded.”[iii]
The objective is for the dollar to be replaced as the settlement medium of intra-national trade. And the idea is that this new trade settlement currency will be open to be joined by other nations. If this project is successful, then the dollar will lose its status as the reserve currency for participating nations.
As described above, the project is impractical, appearing to be a political statement designed to gain early support for the project. Elsewhere, we see proposals to set up a new Moscow gold exchange, purportedly to replace access to the London bullion market now denied to Russia and its refiners. But again, we see that the moving light is the same Sergei Galzyev, this time telling us that the demand comes from Russia’s bullion industry.
If it is to work, Glazyev’s original proposal to Eurasian states cannot proceed. The inclusion of national currencies in some sort of daily fixing does n0t guarantee stability, and every time another SCO member decides to join a whole rebalancing exercise would have to take place. The same considerations apply to “exchange traded products”, which from other statements we can take to refer to commodities traded between members of the scheme.
From being an inherently defensive move against US dollar hegemony, subsequent confirmation of Saudi intentions to switch payments from dollars to unspecified Asian currencies changes priorities. From convincing a coterie of Eurasian states, Glazyev’s prize is to persuade the Saudis and other gulf energy suppliers as well to accept the new trade settlement medium. Only a gold-based currency fits the bill. With their Bedouin roots in physical coin, a gold-based trade settlement currency acceptable to the Saudis would have the added advantage of dealing a significant blow against the dollar.
The more one considers the situation, one can only conclude that gold is the logical basis for such as scheme, and Glazyev’s involvement in the new Moscow gold exchange suggests he has reached a similar conclusion. If that’s the case, then it will be necessary to back a gold fixing scheme in such a way that participants can confidently retain balances in the new currency, even though it will almost certainly be digital in form.
Assuming that the scheme progresses towards fruition with gold representing commodity-based transactions generally, the requirement for retaining dollar balances will fall away. The impact on the dollar has to be our next topic.
Foreign dollar balances are simply enormous
As illustrated by the chart above, foreign ownership of financial assets including bank deposits totals nearly $30 trillion, down over $4 trillion since last December. Some of this is due to fluctuations in portfolio valuations, but clearly the foreign appetite for holding dollars is waning. If the Russia/China Asian bloc comes up with a viable trade settlement currency, both official ownership and private sector ownership of dollars will be less required, and ownership by foreigners will diminish further.
Dollars will be sold for other currencies, to purchase bullion, or to build stocks of durable commodities. The global desire to sell dollars for other major fiat currencies was knocked on the head by currency sanctions against Russia. And we can be sure that the message about holding yen, euros, or sterling is widely received in all Asian nations.
Therefore, US-led currency sanctions against Russia will probably backfire badly. With the dollar being sold for bullion and commodities, the value of dollars relative to bullion and commodities will obviously decline. It will be a trend readily understood by foreign holders, likely to drive the dollar down more rapidly than might be expected.
It may be that the process has already started. So far this year, the dollar has gained against other major currencies due to the Fed having led other central banks into higher interest rates in an attempt to contain price inflation. Other central banks are now responding belatedly with their revised interest rate policies, and consequently the rising trend in the dollar’s trade weighted index has broken down from its previous uptrend. The chart below illustrates the dollar’s move so far.
Compounding the dollar’s problems are market suspicions that the Fed will be forced into a policy pivot as evidence of a recession mounts. While softening its line slightly the Fed still denies it, presumably for fear of encouraging yet higher consumer prices. Markets are betting that it is only a matter of time before the Fed is forced to call a halt to interest rate rises and reintroduce quantitative easing. The yield on the 10-year US Treasury note has fallen from 4.4% to 3.63%, while the CPI ‘sincrease slowed to 7.7% in October.
Sanction-induced commodity and energy price rises have obscured a wider trend emerging from the end of the forty years of the financialisation of major western economies — the end of a prolonged everything bubble. Intractable government deficits are driving the debasement of currencies relative to the values of commodities. A new financial cold war between the hegemons is undermining the logic of supply chains across multiple jurisdictions. Just-in-time inventory management has become riskier. And while supply chain difficulties have lessened recently, the trade outlook has deteriorated, supply chain reform is on the cards, and commercial bank credit is long overdue its 10-year cyclical downturn.
Managing foreign dollar liquidation
Assuming that foreigners act as outright sellers on a net basis rather than merely hedging existing positions, the buyers will be either the Fed in the case of official institutions selling, or commercial banks.
When the Fed buys dollars, it reduces the liability side of its balance sheet, or redeploys repatriated dollars by buying assets. And since we are considering net selling by foreigners, those assets will be dollar-denominated assets in the domestic US economy. Whether the Fed reduces its balance sheet or buys domestic assets is a matter for economic and monetary policy.
Commercial banks will be acting principally for domestic US buyers, in which case there is no reduction in their aggregate deposit liabilities because the ownership of deposits merely changes. However, if they are not acting for domestic buyers but for themselves and deposits are being withdrawn, then they must reduce their balance sheet assets to match. They can do this by selling financial assets if they have them on their balance sheet, or by calling in loans. However, we know from US Treasury TIC figures that commercial banks have limited foreign currency loan exposure (i.e. balance sheet assets —in June, it was $687bn[iv]) and with other currencies having been weak they are unlikely to have unhedged on-balance sheet foreign currency financial asset liabilities in any quantity. Therefore, the bulk of private sector involvement is off-balance sheet and therefore the effect on outstanding commercial bank credit will be limited.
It would therefore appear to be mainly a problem for the Fed, and the impact on the dollar of foreign selling will only be lessened through the expansion of the Fed’s balance sheet. The chart below gives a clue of what the relevant impacts are likely to be.
We have ascertained that commercial banks will not be buying dollars from foreigners in sufficient amounts to affect their balance sheets materially. Instead, if foreigners decide the world is moving away from the dollar, the Fed’s balance sheet currently standing at $8.6 trillion will be exposed to a contracting foreign dollar mountain of up to $30 trillion. There is a leverage factor in this which could be substantial.
A further problem for the monetary authorities is that they increasingly expect a recession, even though it appears to be slow in arriving. A recession is a contraction in commercial bank credit, against which the Fed would expect to compensate by the combination of an expansion of its balance sheet and the government increasing its budget deficit. In other words, after fifty-one years of the dollar being totally fiat, and the dollar seeing demand on the basis that it is the only reserve currency, the ending of that period at a time when the US economy is entering a recession is the worst combination of events possible.
This is probably the most compelling reason for the US Government to seek to de-escalate tensions over Ukraine and dismantle sanctions against Russia. It would or should have been on the CIA’s William Burns’s mind when he met his opposite Russian number in Ankara a fortnight ago.
The tweets speak for themselves. SBF/FTX v. Musk. Who’s the enemy?
This is absolutely correct. There are a lot of tense negotiations going on right now over who gets to fall, stand tall and bend the knee in the coming months
The national political and military leaders who committed America to wars of choice in Vietnam, the Balkans, Afghanistan, and Iraq, did so as a rule because they were convinced the fighting would be short and decisive. American presidents, presidential advisors, and senior military leaders never stopped to consider that national strategy, if it exists at all, consists of avoiding conflict unless the nation is attacked and compelled to fight.
The latest victim of this mentality is Ukraine. In the absence of a critical root-and-branch analysis of Russia’s national power and strategic interests, American senior military leaders and their political bosses viewed Russia through a narrowly focused lens that magnified U.S. and Ukrainian strengths but ignored Russia’s strategic advantages—geographic depth, almost limitless natural resources, high social cohesion, and the military-industrial capacity to rapidly scale up its military power.
Ukraine is now a war zone subject to the same treatment the U.S. armed forces inflicted on Germany and Japan during the Second World War, on Vietnam in the 1960s, and on Iraq over decades. Power grids, transportation networks, communications infrastructure, fuel production, and ammunition storage sites are being systematically destroyed. Millions of Ukrainians continue to flee the war zone in pursuit of safety, with ominous consequences for Europe’s societies and economies.
Meanwhile, the Biden administration repeatedly commits the unpardonable sin in a democratic society of refusing to tell the American people the truth: contrary to the Western media’s popular “Ukrainian victory” narrative, which blocks any information that contradicts it, Ukraine is not winning and will not win this war. Months of heavy Ukrainian casualties, resulting from an endless series of pointless attacks against Russian defenses in Southern Ukraine, have dangerously weakened Ukrainian forces.
Predictably, NATO’s European members, which bear the brunt of the war’s impact on their societies and economies, are growing more disenchanted with Washington’s Ukrainian proxy war. European populations are openly questioning the veracity of claims in the press about the Russian state and American aims in Europe. The influx of millions of refugees from Ukraine, along with a combination of trade disputes, profiteering from U.S. arms sales, and high energy prices risks turning European public opinion against both Washington’s war and NATO.
Russia has also undergone a transformation. In the opening years of President Putin’s term of office, the Russian Armed Forces were organized, trained, and equipped for exclusively national territorial defense. But the conduct of the Special Military Operation (SMO) in Ukraine has demonstrated the inadequacy of this approach for Russia’s National Security in the 21st century.
The opening phase of the SMO was a limited operation with a narrow purpose and restricted goals. The critical point is that Moscow never intended to do more than persuade Kiev and Washington that Moscow would fight to prevent Ukraine from joining NATO, as well as the further mistreatment of Russians in Ukraine. The SMO was, however, based on invalid assumptions and was terminated. As it turned out, the limited nature of the SMO achieved the opposite of the outcome that Moscow desired, conveying the impression of weakness, rather than strength.
After concluding that the underpinning assumptions regarding Washington’s readiness to negotiate and compromise were invalid, Putin directed the STAVKA to develop new operational plans with new goals: first, to crush the Ukrainian enemy; second, to remove any doubt in Washington and European capitols that Russia will establish victory on its own terms; and, third, to create a new territorial status quo commensurate with Russia’s national security needs.
Once the new plan was submitted and approved, President Putin agreed to an economy of force operation to defend Russian territorial gains with minimal forces until the required resources, capabilities, and manpower were assembled for decisive operations. Putin also appointed a new theater commander, General Sergei Surovikin, a senior officer who understands the mission and possesses the mindset to deliver success.
The coming offensive phase of the conflict will provide a glimpse of the new Russian force that is emerging and its future capabilities. At this writing, 540,000 Russian combat forces are assembled in Southern Ukraine, Western Russia, and Belarus. The numbers continue to grow, but the numbers already include 1,000 rocket artillery systems, thousands of tactical ballistic missiles, cruise missiles, and drones, plus 5,000 armored fighting vehicles, including at least 1,500 tanks, hundreds of manned fixed-wing attack aircraft, helicopters, and bombers. This new force has little in common with the Russian army that intervened 9 months ago on February 24, 2022.
It is now possible to project that the new Russian armed forces that will evolve from the crucible of war in Ukraine will be designed to execute strategically decisive operations. The resulting Russian force will likely take its inspiration from the force design and operational framework recommended in Colonel General Makhmut Gareev’s work, If War Comes Tomorrow? The Contours of Future Armed Conflict. The new military establishment will consist of much larger forces-in-being that can conduct decisive operations on relatively short notice with minimal reinforcement and preparation.
Put differently, by the time the conflict ends, it appears Washington will have prompted the Russian State to build up its military power, the very opposite of the fatal weakening that Washington intended when it embarked on its course of military confrontation with Moscow.
But none of these developments should surprise anyone in Washington, D.C. Beginning with Biden’s speech in Warsaw effectively demanding regime change in Moscow, the Biden administration refused to see foreign policy in terms of strategy. Like a stupid general who insists on defending every inch of ground to the last man, President Biden confirmed the United States’s commitment to oppose Russia and, potentially, any nation state that fails to measure up to globalism’s hypocritical democratic standards, regardless of the cost to the American people, whether in terms of their security or prosperity.
Biden’s speech in Warsaw was hot with emotion and mired in the ideology of moralizing globalism that is popular in Washington, London, Paris, and Berlin. But for Moscow, the speech was tantamount to a Carthaginian Peace plan. Biden’s “take no prisoners” conduct of U.S. foreign policy means the outcome of the next phase of the Ukrainian War will not only destroy the Ukrainian state. It will also demolish the last vestiges of the postwar liberal order and produce a dramatic shift in power and influence across Europe, especially in Berlin, away from Washington to Moscow and, to a limited extent, to Beijing.
Econophysics2020 
