Housekeeping note: Still running a reduced service because of the Easter hols. But will be back with gusto soon.
Finance, markets, etc..
- The ECB did a CBDC survey, and it turns out people are keen on privacy.
- More on how Zoltan Pozsar sees the world.
- Energy crisis threatens to eclipse 1970s shocks, says Daniel Yergin. Meanwhile Yellen recognises there may be issues with blocking oil exports from Russia, because many countries are highly dependent on it.
I’ve been a big fan of Yergin’s ever since I was introduced to his book The Prize in the early noughties while working at BP. Back then, it was a recommended new-starter read for most HQ employees. The energy major also kept a VHS copy of the spin off documentary series in a drawer in the St James’ office. These days you can catch that on YouTube.
In any case, I think Yergin’s view on this is right on the money.
I remain utterly perplexed as to why the serious people of finance Twitter can’t grasp the basic fact that shutting out Russian gas/oil will hurt us more than it will hurt them. Or to what degree leaders will end up accountable for causing global famines and mass poverty if they go ahead with this policy.
I am not convinced at all that the rest of the world will ever be willing to make the necessary sacrifices to make this a viable long-term policy.
Yes the impact on Russia is likely to be more painful for them than us in the immediate term. But the slow burn effects for the rest of the world may be much bigger. The idea we can plug the gap with US LNG exports and renewables is laughable. It’s going to take a minimum of 2-5 years to realign the energy system, and in that time far too many people may die from the imbalances that are going to be caused by this policy.
How can we shut down the economy for two years to save people from Covid – discarding democratic principles and civil liberties in the process – but then be totally happy to put millions of lives at risk from energy poverty and hunger in the name of defending sovereignty and civil liberties?
- Germany’s Scholz says globalisation’s phase of low prices is over.
- Food price riots are already happening in Peru.
It is very unlikely that emerging markets will align with the West on Russian sanctions for any extended duration if they’re facing this sort of disruption at home.
- Rishi Sunak has asked the Royal Mint to issue NFTs.
I remain both highly fascinated by and sceptical of the NFT phenomenon, which I’m still convinced is more of an “attention economy” thing than a rare asset thing. My preferred analysis is that it’s a type of patronage market where bidders allocate funds to the cultural and aesthetic causes they favour for the sake of sending social signals that a particular message is worth duplicating. In that sense it’s a capital raising market for soft propaganda which has the capacity to promote specific ideologies. The holder of the NFT gets to indulge in the same sort of benefits that a funder of public art gets to benefit from. Prestige and notoriety. You might call it the ultimate digital mechanism for virtue signalling. “You have a flag on your bio but I can prove I paid handsomely for x y or z cause, because I own the NFT. So my virtue signal is better than yours.”
- Putin’s daughters are on the sanctions wanted list, but Edward Luttwak thinks this is bad policy.
A French ski instructor once told me he had taught Putin’s daughters in Chamonix. How true or not this is, I do not know. What I do know is that the Russian presence in Chamonix collapsed post 2015 having been pretty substantial in the years leading up to that.
- The case of the British nukes.
I sometimes wonder if Brexit Britain – and its relationship with Scotland — offers some important insights into what’s going on in Ukraine.
If you consider the post imperial period as one in which the UK was always within Europe but not part of it, and increasingly struggling to balance allegiances to the commonwealth (now under the de facto power and protection of the United States), with those to Europe, you realise it, like Ukraine, was also operating as a very important geopolitical pivot point. At least in the Brzezinski sense of the word.
This pivot position became far clearer after the signing of the Nassau Agreement of 1962, which saw the US openly supplying the UK with missiles for its Polaris nuclear deterrence programme — but only on the condition that NATO would have a say over how these missiles were deployed (unless it was specifically for UK self defence purposes). This point unnerved France’s Charles de Gaulle so much he used it as an excuse to veto Britain’s entry to the EEC in 1963 on grounds that it made the UK a mere US vassal.
As the NYT reported at the time:
France went on to develop its own “independent” nuclear force under De Gaulle, while Britain obviously maintained a nuclear fleet even as it went on to become a part of the European Union. But, ultimately, there was a continuing feeling that the special nuclear relationship made Britain somewhat of an American Trojan horse in Europe.
While Brexit was sold as a democratically determined breakaway from the wider European “empire” for independence purposes, in reality, it also represented a move to realign itself economically with America and the commonwealth. The wider effect of this on UK’s position as a nuclear power, however, has mostly gone unnoticed.
Unlike France, which does not commit its nuclear capability to the defence of other European allies, the UK’s US-supported system always has done, and would — all things remaining constant — continue to do so even in a post-Brexit world.
Except, it seems notable in that context that one major consequence of Brexit — Scottish independence — could unravel Britain’s capacity to maintain a nuclear deterrent altogether. This is on account of the SNP’s commitment to nuclear disarmament.
It seems equally notable that the UK should be moving to expand its nuclear warhead stockpile for the first time in three decades regardless of this fact.
The French brouhaha over Australia abandoning a contract for French-made diesel-electric powered submarines in favour of US or UK nuclear-powered submarines is also of relevance. The AUKUS agreement signals an invigorated anglo-saxon/commonwealth that may be keen to abandon nuclear non-proliferation obligations by the backdoor. (This is because nuclear-powered subs offer a potential mechanism by which inspection and verification can be bypassed.) The agreement is also indicative of a potential split within the “western system” some say.
In recent days, the AUKUS agreement has been further empowered by a promise to cooperate on hypersonic weapons.
Consider the Scottish situation in this context.
Trident as it stands is housed in the Faslane submarine base, in Coulport, Scotland. According to a European Leadership Network paper from 2021, however, any prospect of a Scottish secession would “generate fundamental operational and fiscal issues for the UK’s nuclear deterrent.” As the Guardian noted in the linked article, unless Scotland agreed to lease back the Faslane base to the UK — far from guaranteed — it might be impossible for the UK to find an alternative port for the system. Hence, presumably, the importance of the Australian nuclear-submarine deal.
Another point raised in the Guardian story is that the only comprehensive public assessment of how Scottish independence might impact the global nuclear balance was done by the Campaign for Nuclear Disarmament. This noted that “if an independent Scotland insisted that Trident must be removed then this would probably result in there being no nuclear weapons in Britain.”
The CND link is interesting because of the longstanding connection between the organisation and Russian funding. It’s not clear therefore if it is really true that the UK couldn’t migrate the base to somewhere else in the UK.
Might this uncertainty explain the impetus to get more American-controlled nukes — i.e. beyond Germany, Italy, Netherlands and Turkey — into mainland Europe sooner rather than later (be it through Poland or Ukraine)?
Does it explain why advocates of Scottish independence are annoyed by the proposition that Putin is a backer of Scottish independence? For sure.
After all, if Scottish independence or reversion to EU status is dependent on the decommissioning of Britain’s nuclear fleet, it would leave eastern European NATO without a concomitant nuclear deterrent. If that doesn’t empower Putin, it’s hard to imagine what does.
If you consider the UK’s departure from the EU as tantamount to a shift in allegiances back to America and the Commonwealth, you can see why in a practical (but not ideological) sense there is an equivalence to the Ukrainian moving away from Russia toward the EU. At the very least there is a similar concern about nuclear stability at the heart of the new power arrangement.
It may also be worth considering how the UK might feel if in the long run Scotland changed its mind on disarmament and decided to host a French nuclear fleet instead?
Covid is still a thing:
- Shanghai Covid lockdown ‘will have a global effect on almost every trade’.
Just what the world does not need now: a major lockdown in Shanghai. Sources on the ground (who are incidentally about to be sent to the Covid gulag) inform TBS that food availability is genuinely getting tight. Many residents are now depending on government distributed food bundles, except these are getting stolen or used to extort people. There are allegedly 140,000 beds in Shanghai — but if temporary hospitals are being set up, one has to wonder about the accuracy of the official figures.
- And now there’s group buying in Shanghai.
From the “fake news” zone:
- The New York Times targets Dr Robert Malone’s anti vaccine disinformation again.
I have an interesting Dr Robert Malone story, but it’s worthy of an independent piece. So expect that shortly.
- There’s a reasonable chance Russia thinks all of Europe is full of passive Nazis.
Russian propaganda has always excelled at mirroring the West’s own propaganda against it. But arguing all of Ukraine has been de facto captured by Nazi factions, and the rest of Europe is full of passive Nazis, takes things to another level. I wonder to myself what does the term Nazi even mean at this point? How can the targets of this propaganda not recognize that any regime that favours the annihilation of another nation or culture is not one of the good guys?
- Ukrainians do bad things too.
- European Commission launches rule-of-law disciplinary procedure against Hungary. This is despite Orban winning a large majority in elections last weekend in a heavily monitored election.
For some reason I keep thinking about Berlusconi.
- Michael Shellenberger is running for governor of California.