Thursday, November 10, 2022

Supply Lines

Providing Lunch,

  Most people think of war in terms of decisive battles and brilliant tactics, but I read that most generals and colonels think of war in terms of supply lines to the fighting forces. Wars are purportedly won more by the 90% "tail" than the 10% "tooth".
  Empires and multinational economic systems appear to be the same way. In the early days of colonialism, swords, armor, cavalry, cannons and muskets slaughtered native populations, freeing up their gold, lands and natural resources for industry, European industry, then American industry. Colonialism then moved some industry to the sources of the resources, while keeping profits at the center of the empire. That was more efficient, and prevailed.
  Surprisingly, in the mid 1800s to mid 1900s, it was discovered that healthier and more motivated workers, with much higher wages and living standards, advanced industry rapidly and profitably. Otto Von Bismarck in Germany and Henry Ford in the US proved that to otherwise dubious elites in Europe and the US.
  Colonialism and the Victorian era exploitation of workers, who died in their 20s, gave way to industrial capitalism with social safety nets for food, housing, medical care and old age. Industrial Capitalism flourished broadly in the world, including in former colonies. 
  Colonies were lost, just as chattel slavery was lost, because these forms were out-produced by industrial economies which provided high standards of living and security for their working populations. Marx was accepted by industrial capitalists, who incorporated his observations and analysis, making the revolutions of 1848-1849 and his Communist Manifesto, redundant. Marx died a success, long before the Bolshevik Revolution, which did not accomplish its stated goals.
  Something changed in "capitalism" in the mid 20th century, quietly, and while maintaining the "brand-name". "Industrial Capitalism" became increasingly parasitized by "Financial Capitalism", which is the "Rentier" model of extracting value from any and all economies. 
  That's parasitic blood-letting. The parasites have taken control of the financial system, which has taken control of the real economy. 
  The financial system, at best, facilitates the functions of the real economy, and carries information about how it is working, by means of production and "profits".
Investments in production provide returns, based on how well the productive project performs in the real economy. 
  Banks don't actually lend to make industries, as Michael Hudson likes to point out. Those "productive loans" are made through purchase of stocks,  and sometimes corporate bonds.
  Banks make non-productive loans on things of value, which already exist, like land, housing, and office buildings. Banks, and finance in general, seek to avoid all risk, placing all risk onto the borrower.
  Productive investments, like purchasing stock in a growing factory, initially accepted risk in the venture, and was understood to share in the rewards of success, by getting paid dividends in the company, as it prospered. The factory could fail. The stock would then be worthless. Doing research into companies, before purchasing their stock was "due diligence". These were long-term investments in progress.
  Financialization and high-frequency-trading have eliminated that model for most public investors, because "activist shareholder" groups can band together, take over the controlling stock of  a company, sell its assets, like factories, take out loans, and use the money to buy the stock back from themselves at great profit. they then abandon the hollow shell, like Sears. 
  This is bad for the long-term prospects of any nation, but the profits pay to capture regulators and provide public-relations advertising. "Financial Innovation" sounds better. Clinton got that stuff through Congress, eliminating the protections like the (nice and short) Glass Steagall Act of the Great Depression era.

  So, getting back to supply-lines winning a war... There is now a contest between the financial systems of the former colonial powers, the "developed/industrialized" nations, which are now being consumed from within, and the other 80% of the world, which pays them "tribute" in the form of profits, and supplies them with raw materials, and more and more manufactured goods.
  Why supply the "owners" with profits and goods if they control neither the raw materials, the labor, or the means of production?
The only practical answer is that you will be severely harmed if you don't, like Saddam Hussein and Moammer Ghaddaffi were. 
  That perfectly-good-reason is brought more and more into doubt, as western neo-colonial military prowess declines. Cuba, Iran and Venezuela are still being economically choked, which brings suffering and death upon their citizens. They are promised "relief" if they comply, but they see how those promises have been kept to others.
  The NATO debacle in Afghanistan looked bad, looked like the fall  of Saigon. The punishment of Russia, and destruction of the Russian economy, through the war in Ukraine, and western sanctions, was supposed to reassert the threat of suffering for non-compliance with the extraction-model. The punishing attacks broke fundamentally accepted rules of the global financial system, an all-or-nothing risk to that $US financial system. $300 billion of Russian $US and gold were confiscated. All $US holdings are declared to be discretionary to the US government going forward. 
  Iran, Venezuela and Afghanistan had been "sanctioned" this way, already, but this move meant that no global economic player had any security of wealth within the $US system. This made the issue of alternative global trade finance pressing and urgent to the rest of the world, 80% of the world. Fortunately, they had been working on alternatives since 2008, mainly to reduce their losses through payment of "tribute" to the system of financial-capitalism. 
  China has become the global manufacturing engine that the US was from the 1930s through the 1960s. Russia has the most natural resources of any country (USA #2). The BRICS consortium and the Shanghai Cooperation organization provide frameworks for cooperation outside of the $US dominated western financial system. Many exploited countries of the "global south" would much prefer to profit from their own national resources and industry, to raise the living standards of their own citizens. This is not to say that their elites are not selfish and dishonest, but to say that they have good reason to cooperate to replace the present exploitative system, especially since the threat to them personally is becoming less and less.
  After Nixon was forced to default on the gold-standard, and negotiated a special-relationship with King Faisal, Saudi Arabia became the pivotal country in the petro-dollar arrangement. Saudi Arabia only accepted $US in payment for oil, holding global oil markets to that standard, and reinvesting $US in US Treasury debt, sustaining the $US imperial system and funding the US federal government in (almost) perpetuity.
  Saudi Arabia now has other offers to consider. Protection and profit are the interests of the Kingdom. Russia seems to be pretty reliable in the "protection" department, and China is a big market, and manufactures most of what the world needs. Saudi Arabia openly plans to join BRICS, and has been very cooperative with Russia and China, even somewhat cooperative with Iran, lately.

Not very afraid:

​  ​Russian LNG suppliers have recently sold LNG cargoes in Asia at close to the prevailing spot market prices, suggesting that fears of sanctions on Russia’s LNG exports have nearly disappeared.
  It is interesting to me that Musk and Dorsey have history in PayPal, electronic finance, and Musk's biggest co-owners of Twitter are now Dorsey and a Saudi Prince. Is this going to be a new independent global financial platform? Just wondering...

​  ​The post-war phase (1950-1980) involved the victory of national liberation movements – China, Vietnam – in south east Asia and the middle-east – still ongoing – enabled the peripheries to impose a revision of the old asymmetrical terms of the global system and to enter into the industrial age. This period of negotiated globalization was exceptional, and it is interesting to note that the world then experienced growth that was the strongest known in history as well as the least uneven in terms of the distribution of what was produced and distributed
​  ​But whisper it softly there has occurred a slow geopolitical burn which is now not easily snuffed out and which goes from strength to strength. This emerging bloc of independent Eurasian states led in the main by Russia and China and organized in the BRICS (Brazil-Russia-China-India-SouthAfrica) and Shanghai Corporation Organization (SCO) represent an alternative system to the glaring global level of inequality and stands out like a beacon of light against the parasitism and orthodoxies of laissez-faire extractive capitalism/imperialism.
​  ​In more general terms Michael Hudson lays out a precis of a choice between the two alternatives. As follows:
"Finance capitalism is de-industrializing the US economy and that of its allied NATO satellites. The Destiny of Civilization explains that the resulting international diplomacy is not a competition for markets (as the Western Economies are already deindustrializing as a byproduct of financialization and capital’s war against wage labour), nor a conflict between democratic freedom and authoritarianism, but rather a conflict of economic systems juxtaposing the rentier economics of debt-deflation and austerity to socialist state-subsidized growth protecting the 99% by keeping the 1% in check.’’
​ ​
​  The global financial-extraction system sees a new way to forge-forward in reducing wages, while maintaining worker-motivation and "productivity". We know that they see "transhumanism" as the answer, replacing human ingenuity with AI, and motivating the few necessary human workers with brain implants and control of all finance and purchases.​ This "solution" clearly converges on reduction of workers to nothing, no-expense, no-voice, no ability to be "consumers", to be a "market". Like exponential-growth on a finite planet, the end-game of this "trans-human" regime is clearly defined, and would be approached in a short time.
  What would be the next economic arrangement? It seems like there would not be one, after the replacement of natural humans with cyborg-slaves, incapable of autonomus actions. 
  Maybe I just don't have a good enough imagination, but it is easier  for me to imagine replacement of the global-neoliberal financial-capitalism model with good-old-fashioned Henry Ford industrial capitalism, supported by public provision of schooling, utilities, roads, medical care and retirement security.

  ​The pervasive use of government newspeak in this article is chilling, but that's what happens when one has to quote government mouthpieces and functionaries.​
You have to think a bit about what each genteel statement means when it is carried out in the world.
The Quiet Merger Between Online Platforms and the National Security State Continues

​  Hungary says they saw what happened when they agreed to the COVID emergency borrowing through the EU. Hungary and Poland are having their own funds withheld by the EU right now, but are expected to vote in favor​ of backing another loan-to-nowhere for the NATO Mafia to distribute as it sees fit.
Hungary reacts to EU aid plan for Kiev

​  Russian preparations to withdraw across the river from Kherson are detailed here. The city has been evacuated of civilians, and is expected to become a kill-zone for either Russian or Ukrainian military forces soon.​ Ukrainian forces have taken very high losses in the past 3 months of offensive attacks around Kherson.   If Ukrainian forces take Kherson they can strike at Crimea. If Russian forces later retake Kherson, they are expected to advance to Odessa, capturing the whole Ukrainian Black Sea coastline. Ukraine is really muddy and still having heavy rains. Tank maneuvers will be possible by early December, when the ground is frozen solid.

​Local Investor (pictured with one of 4 developing banana stalks)​  


  1. You forgot that the Saudis were promised protection in return for investing their surplus in US$ (they do accept payments in other currencies but promptly covert them into US$.) They saw that the protection was worthless against Houti (and Iranian) attacks. That is what prompted them to move away from following US dictates.

    1. The House of Saud gets "protection" the way a gangster gives "protection", mainly from the gangster. They also get to buy very expensive weapons systems from the gang.
      The House-of-Saud is negotiating with rival gangs.
      In May 1914, Ibn Saud made a secret agreement with the Ottomans as a result of his unproductive attempts to get protection from the British.[26] However, due to the outbreak of World War I, this agreement which made Ibn Saud the wali or governor of Najd was not materialized, and because of the Ottomans' attempt to develop a connection with Ibn Saud the British government soon established diplomatic relations with him.[26] The British agent, Captain William Shakespear, was well received by the Bedouin.[27] Similar diplomatic missions were established with any Arabian power who might have been able to unify and stabilize the region. The British entered into the Treaty of Darin in December 1915, which made the lands of the House of Saud a British protectorate and attempted to define the boundaries of the developing Saudi state.[28] In exchange, Ibn Saud pledged to again make war against Ibn Rashid, who was an ally of the Ottomans.