A Chronic Illness.

It seems incurable in the US. I was reading Kunstler's predictions (I don't make "predictions"--it is a silly business) today and bang, here it was: 

Russia is not our economic rival. Vast as its land-mass is, Russia’s economy is not much bigger than the economy of Texas. 

Ahh, no.  In one phrase, immediately, two major mistakes which are so symptomatic of the America's mental health this very same James Kunstler writes about:

Of course, this matter has even greater significance for correcting the meta-problem of America chronically lying to itself. RussiaGate and its spinoffs was such a gargantuan edifice of malicious dishonesty that it must be deconstructed in the courts, or the mental health of the nation may not recover.

Getting their numbers straight could be a good start. In fact, let's take a look at numbers. 

1. Will start with this tired thesis of Texas' economy being either larger or the size of Russia's economy. The brief look at the size of the Texas economy reveals, based on US government data, that its GDP was in 2018 $1.803 trillion.  Mind you, with Texas (as is the case with the US), does NOT have PPP index because it doesn't exist for the US or, rather, equals its nominal GDP which is denominated in US Dollars for global economy--a travesty of unimaginable scale. But still. This is not to mention the fact that out of those 1.8 trillion, huge chunk is "contained" in well known to us "industries" such as FIRE and other unspecified services. 

Go figure. Of course, Kunstler forgets another teeny-weeny fact, that Texas is an organic part of the US economy at large, and no matter how large Texan egos are, Texas without the United States will be immediately reduced, if viewed as a separate nation (well, they think themselves there in Texas), to a rather economically insignificant entity whose economy will immediately lose core industries required for the United States as a nation--how about aerospace? You get my drift. 

Now, we, of course, have to get to this damn Russia which not only produces practically everything on her own, but has an economy which ranked 5th ( I propose, and I have the argument, that it is 4th) globally and its actual size in accordance to IMF--another belch of a dysfunctional American financial voodoo system, well, judge for yourself, for 2019:

So, Russian actual economy dwarfs that of Texas, plus, which comes as an insult to injury for Texas, Russia produces things which Texas doesn't, and if taken as a separate "economy" will never be able to produce. Texas will never be able to produce within, let alone without, the United States nuclear icebreakers, space vehicles, whole spectrum of aviation from combat to commercial, to...Ah, here comes this second thesis by Kunstler:

2. Russia is "not economic rival" for the US. It is NOT black and white, because there are few critical fields in which Russia is not only a full fledged rival for the US, but actually THE ONLY competitor. I, of course, may start with this trivial puny hydrocarbons issue, which is also partially in the foundation of US non-stop economic sanctions on Russia, because Russia is clear and present danger to only one resource the United States needs desperately to export to EU and this is natural gas. In fact, what we observe currently is America's full blown economic warfare against Russia (and EU) precisely because Russia's massive hydrocarbons industry which is not only immensely competitive with the American one, but, actually, threatens US "plan" for EU. 

Then, of course, comes nuclear energy field, but here US nuclear energy is simply not competitor to a monster of Rosatom and its gigantic portfolio (from Rosatom 2018 report). 

And then come weapons... Here, not only Russia is not just "economic rival", she is a clear and present danger for the US. For a simple reason, she produces a spectrum of weapons systems Texas (even integrated into the US economy) will not be able to produce, especially from concept to R&D to a full manufacturing cycle. And then, of course, Russia offers weapon systems which the United States (let alone Texas) simply do not have. I do not like SIPRI (they are very questionable source of data) but even this dated (2017 chart) shows who real bosses in the global arms trade are. 

I omit here, of course, quality of weapon systems and in terms of cruise missiles, air-defense systems and combat aircraft, to name a few segments, US is losing ground pretty fast. 

So, is Russia economic rival to the United States? Oh, yes, she is. Especially when one peels off layer after layer of the American financial BS which passes as a GDP and faces a rather not that huge (large still) actual GDP, or, let's put it this way, value US real economy produces. In the end, this significant piece of news shouldn't have escaped Kunstler's attention, because it is yet another confirmation of upcoming Discretionary Spending crunch in the US of which so many people warned for years.

WASHINGTON – The Department of Defense has sent a plan to the White House that would cut the construction of more than 40 percent of its planed Flight III Arleigh Burke destroyers in in fiscal years 2021 through 2025.In total, the proposal would cut five of the 12 DDGs planned through the so-called future years defense program, or FYDP. In total, the plan would cut about $9.4 billion, or 8 percent, out of the total shipbuilding budget, according to a memo from the White House’s Office of Management and Budget to the Defense Department obtained by Defense News. The memo also outlined plans to accelerate the decommissioning cruisers, cutting the total number of Ticonderoga-class cruisers in the fleet down to nine by 2025, from a planned 13 in last year’s budget.The Pentagon’s plan would actually shrink the size of the fleet from today’s fleet of 293 ships to 287 ships

All this is not just the realization of the dramatic change in the warfare, which I termed a Real Revolution in Military Affairs, with massive tactical, operational and strategic ramifications, but also the fact that current military spending by the US is NOT sustainable, especially for a minuscule amount of bang for a buck US military was getting in the last couple of decades.  

These points which I outlined in this post are the main reasons for the United States initiating a Cold War 2.0 with Russia, which American elites always viewed in XX and XXI centuries as a threat and the only viable and capable impediment for their plans on global domination. Hence mental breakdown. Russians are keenly aware of what is going on with America and, as I pointed out earlier this year Russians can relate, as Irina Alksnis so brilliantly encapsulated:

However, to hear this simple advice--not to mention  following it--the United States need to stop, at least for an instance, and silence themselves. To stop shaking air with statements, declarations, demands, and threats, which come across as either strange, or outright silly because of their obvious inability to ever become a reality. But it is precisely, it seems, what the US is not capable of doing. As a result--the continuation of never-ending declaratory carousel: Moscow, Assad must go! Russians, we will provide for freedom of navigation in Kerch Strait! Russians, we will punish you for support of Maduro. But the most insulting for Americans is that only Russia can understand them. Because we remember the pain behind those words.  

Lost In Translation?

Somehow, in the midst of all this FUBAR with US bureaucrats threatening Russia to start the war for whatever reasons, and the ongoing mass hysteria around new SCJ nomination, with new rape victims which Kavanaugh may have heard about once or saw on TV, "stepping out", one piece of real news got lost. It is huge:

HONG KONG (Reuters) - U.S. crude oil shipments to China have “totally stopped”, the President of China Merchants Energy Shipping Co (CMES) said on Wednesday, as the trade war between the world’s two biggest economies takes its toll on what was a fast growing businesses.  

See dynamics here. It doesn't stop there and it goes even further:

He also said the trade dispute was forcing China to seek soybeans from suppliers other than the United States, adding that China now bought most its soybeans from South America. 

Make no mistake, I get it, MAGA, Trump's "tactics" (capable to impress only sophomores from business schools) in "negotiating" the deals. But my question here, granted, now adjusted for Trump's foreign policy "accomplishments", such as allowing, in fact, initiating,  infestation of his own administration with lowest of the low neocons, is this: are they out of their freaking mind? Again, I get it, Trump thinks that he can convince China to "do better" in economic relations with US. Sure, but here is a very interesting dynamics from the other economic "front", this one is Russian.  

Even morons from US Treasury begin to suspect that this whole "trade war" and, especially, sanctions not only do not work--in fact, they hurt the US more and more. While giving its due to "evil, aggressive Russia" about to take over the world, US Treasury suddenly "discovered" for itself why US sanctions do not work on Russia. 

We cannot, for example, counter Russian aggression in the same way we approach countries like North Korea or Iran.  Russia’s economy and resource base are more sizeable, and is fully integrated into the global economy and international financial system.  North Korea and Iran, on the other hand, for decades have been largely or almost entirely isolated from the global financial system.  Because Russia’s integration presents an especially unique challenge, we’ve surgically deployed Treasury tools to balance maximizing pressure on Russia while minimizing unintentional spillovers to the United States, our European allies, and the global economy.  

Obviously US Treasury must pander to such neocons as  Menendez and Corker, but behind this fluffy rhetoric is nothing more than admission of a failure and fear. In what sense, you may ask? Well, consider this: President Putin today is in India. After immense pressure on India the US applied in the last months the deal on S-400 is on and it is massive--worth $5 billion. Turkish intentions to buy the same system and even SU-35s in themselves could be a PR disaster for both US and NATO. Russia continues to press hard on immensely lucrative hi tech arms market with cheaper and better, sometimes much better, weapon systems than the US can offer. 

And then, of course, there is Russian energy--pipe gas, LNG, oil and nuclear--and here is the deal: the US is simply not competitive in this market. It is not even a debatable point, it is a hard fact of life and, like a victim caught in the quicksand, instead of limiting one's moves in order to slow down sinking, the US, it seems, is hell bent on destroying own economy and sinking the country with it.

It is a known fact today that US elites, with few exceptions, do not understand what IS US economy today, nor do they have understanding of its real size and capability. Russia, through the words of its high ranking representatives not for once expressed openly an intention to remove the US as number one on the arms market, now, China is not worried too much about energy issues with the US (to the US loss, of course) since massive energy infrastructure between Russia and China is nearing its completion. So, instead of finding compromises, Trump Administration thinks that it has wherewithal to be aggressive. Even if to adjust our train of though for alleged Trump's desire to extricate the US from "bad deals", one has to ask this question:

                               What about US Dollar?    

Well, even Bloomberg sensed something. As an example, Russia made dedollarization its official economic policy. And the issue is not anymore good ol' dilemma between weak or strong dollar which, supposedly, will make, in case of being weak, US products stronger while simultaneously providing for the US re-industrialization--this is not the case anymore because the world does not operate like this anymore. And while the bunch of ignorant US foreign policy "experts" pass the gas on how to preserve this "liberal world order", they should pay attention to the fact of real competitiveness of  the nations US declares trade wars and slaps sanctions on and why those nations are not enthused about this mythical "liberal world order", which is as liberal as I am Chinese. I have my very serious doubts that adequate assessment of reality by US elites is possible anymore and that is very bad news for America. I will make a review of commercial aerospace outlook soon--it is a wowser.   

UPDATE:  No comments are necessary.

 

Military Power (Cont'd 6)

Incomparable Corelli Barnett wrote in his "The Collapse Of British Power": "As Adam Smith, the founder of liberal economics, put in 1776:"By pursuing his own interest (an individual) frequently promotes that of society the more effectually than when he really intends to promote it." It was Adam Smith who formulated the doctrine of Free Trade, the keystone of liberalism, which was to exercise a long-lived and as baneful effect on British power as Wesley and Whitefield's preaching. Adam Smith attacked the traditional "mercantilist" belief that a nation should be generally self-supporting.... According to liberal thinking, a nation was no more than so many human atoms who happened to live under the same set of laws.."

It is not an accident, that liberal economics has its origins in the Anglo-Saxon world, the world for centuries protected by water and insulated from the horrors of the continental warfare. We will touch upon what real nation actually is later, but for now we have to define, if to follow Barnett's thought, what is self-supporting, especially so in terms of military power? Well, I already gave an idea. The greater the number of the enclosed (or complete) technological cycles nation has, more independent it is and more claim it has to the title of a true military power. Consider this example: in previous post it was pointed out that Brazil has a very respectable output of steel. This means several things:

1. Brazil has a serious extraction industry, which extracts all components, including, of course, iron ore itself, required for production of steel;

2. Most likely, Brazil has a fairly advanced chemical industry, since steel production requires a number of chemical elements and products;

3. Brazil, certainly, has a respectable (especially considering this nation's mostly tropical and subtropical climate) energy production;

4. Brazil, certainly, has a substantial machine-building sector (the bells should be ringing now) which produces some of the industrial machinery, cars and even airplanes, such as globally renown Embraer. 

Now, let's imagine that Brazil wants to become not just regional, which she is, but major military power. Could she? After all, Brazil fits CINC criteria. The answer is not as clear cut but still, most likely, it will be no. In modern world, Brazil lacks what really defines a true military power--a genuine (that is enclosed or complete) Military Industrial Complex. Modern military industrial complexes are built on the foundation of almost complete industrial-technological autarky. What does it mean? It means, first and foremost, a full spectrum machine building complex. While the United States is not as huge military power as it constantly claims, it is true military superpower none the less. US claim to military superpowerdom is not in its Armed Forces, however impressive they are. No. It is in the fact, that the United States produces completely on its own practically the whole spectrum of weapon systems, ranging from fairly simple (M-4 rifles or laser range finders) to very complex (Strategic Missile Submarines or BE-3 Sentry AWACS aircraft). United States can produce all of that WITHOUT any assistance from abroad. This is the country, mind you, which declares Free Trade to be one of the pillars of its economic policy. Yet, in the weapons' production, the US remains very autarkic as... it should, if it wants to remain globally militarily relevant well into the 21st Century. But then again, Free Trade and economic liberalism are the figments of imagination of economic schools of thought, which almost always originated in places which never experienced a good carpet bombing or being ravaged by the invasions. Accident? I don't think so, in fact--it is a pattern. 

So, Military Industrial Complex, which is a euphemism for advanced machine building complex, is Alpha and Omega of any serious military power, it is also a euphemism for a complete (or enclosed) technological cycle. Brazil may produce some industrial machines but, in the end, Embraer still flies with Pratt And Whitney, Rolls-Royce or any other engines produced not in Brazil. In fact, nobody in their own mind will share this technology with Brazil. 

Embraer Selects Pratt & Whitney’s PurePower Engines for Second Generation of E-Jets   

Enter Russia. Russia's GDP (PPP), as reported by IMF, is slightly (by about quarter of a trillion of US Dollars) larger than that of Brazil and yet, Russia's "recent" passenger jet Sukhoi SSJ-100, which competes directly with Embraer E-Jets, while benefiting from international cooperation has its engines SAM-146 developed by the JV between Snecma and legendary NPO Saturn. What is most important, Russia, which produces a range of aircraft, produces own engines--some of them decent, others--excellent. Moreover, the trials of PD-14 engine, which is very competitive against the best Western analogues, is proceeding with success. And here is some really strategic hyperlink--Aviadvigatel, which developed this engine, shows cooperation:

PD-14 Cooperation    

As you can see--not a single foreign participant. And here is the difference. Brazil and Russia may have relatively insignificant difference in GDP, but Russia not only produces the whole line of jet engines, but develops new ones (both civilian and military) which not only compete but, in military aviation, can, and very often do, surpass their western analogues. In fact, Russia produces some of the best helicopters in the world, both military and civilian, and leads the world in the number of cutting edge aerospace technologies--be it super-maneuverability or ECM (ECCM). That opens another can of worms in this comparison business. Radio-electronics. Russia, which sells its SSJ-100 internationally and is expected to start flight testing of her MC-21 jet soon, is capable on its own to provide avionics to her aircraft. Concern KRET does this kind of things.  

KRET to Upgrade Russia’s Tu-160 Strategic Bomber Avionics

And it did. 

TU-160 upgraded (In Russian) 

And while Brazil is renown for many fine things, including, of course, real football, producing for decades one of the finest artisans in this sport (Socrates is my favorite of all time) radio-electronics or electric generating equipment of Brazil are not that famous. You can take a look at Brazil's exports in this field here:

Statistical Data Electrical and Electronic Industry 

In the same time, when comparing Russia's exports in power generating equipment, which is as high tech as it comes, the portfolio of orders of Rosatom reaches $300 billion. 

ROSATOM’s overseas orders worth $ 300 billion and growing – Kirienko 

If that is what Obama meant by proclaiming Russia's economy to be "shredded" to pieces and Senator McCain calling Russia a "gas station", then they better check their facts. So, for humanities "educated" "experts" of all kind, who think that iPhone is a pinnacle of high tech, it could be a very rude awakening to recognize that real high tech is a bit different thing. World can live, and, in fact, like me, lives just fine without "smart" phones (good ol' basic, still "smart", phone is just fine), but it can not live without energy generating equipment. Obviously, unlike Brazil or, for that matter, India, whose GDP is much larger than that of Russia, in fact, it almost double that, it is Russia who hauls everybody to the International Space Station and back to Earth. Plus, of course, Russia is the one who, together with NASA, built said ISS. And then comes this OTHER issue--weapons' trade. To sell those weapons, one has to produce those and, like the US, Russia doesn't sell just AK-74s (those, too, of course), she sells full spectrum of weapon systems, from small firearms to the most complex conventional weapons ever created on Earth. Not only Russia is the second weapons' trader in the world, right behind the US, but she is also a direct competitor to self-proclaimed sole superpower of the world. Here is some statistics from famous Stockholm International Peace Research Institute. 

10 Countries That Export the Most Weapons 

The key word here is export, as in produce in own country and sell it abroad. This is possible only for the nations which have a complete industry capable of extraction all necessary raw materials, processing them and then turning them into the most complex finished product humanity knows--a weapon. There is a reason why Russia, who has much smaller GDP than China, sells five and a half times more weapons than PRC, who likes to sell them too. In fact, China is one of the major customers for Russian-made weapons. The reason is--Russia has one of the most advanced military industrial complexes in the world, capable of turning out some of the best, if not the best, weapons in the world. 

     

Is Going To Help To Waste Your Life Away

 

Is Going To Save Your Nation From "Democratization"

Or, as India's Navy knows, this is worth a lot, much more than money. 
        

Now ask yourself a question. What is going to happen if even France, who claims GDP very close to Russia's (short by about $800 billions) will try to have the whole fleet of these:

         

3 completed, 4 building. 

 Or these: 
     

Completed 2, building 4

Yes, the bottom of the French economy will fall off. Why doesn't it in Russia? Remember, in the last post--strategic positioning of the weapons in the house? It is back to the expenses--how much you are willing to pay for your and those dear to you freedom, independence and life? This calculus is beyond the grasp of those who never held anything, other than own satisfaction and ambition, dear and sacred in life. 

To Be Continued.......