1/ A sensible thread in which @ElbridgeColby recognises that economic war against China is a non-starter. As with the Russian sanctions, they wouldn’t hurt the target that much but the blowback would be devastating and would destroy the United States.
2/ But it seems like @ElbridgeColby hasn’t really followed through the logic of this state of affairs: if China is this powerful economically then why would it need to engage in a primitive and risky military strategy against Taiwan?
3/ China increases its global power through trade and economic dominance. This strategy has deep roots in Chinese history. Now check out what they’ve been doing with Taiwan.
4/ American diplomats can tell themselves fairytales about freedom and democracy, but the brass tacks deal the US made with Taiwan was something like: “You be our immovable aircraft carrier, we’ll make you rich by exporting high tech chips to the US.”
5/ When the deal was made there was still some memory lingering about the Chinese civil war too. That is now gone. Ancient history. Meanwhile, the US can no longer offer Taiwan prosperity. Rather it demands that they sanction their largest trade partner.
6/ This is a bad deal. It runs something like: “Side with us because we both love freedom and democracy, but to side with us you need to make yourself substantially poorer by despoiling economic relations with your largest trade partner”.
7/ Now, say you’re sitting in Beijing watching this. Are you thinking: “We need to launch a risky invasion”? Or are you thinking: “Let’s just let this stew for a while, applying pressure when needed; this is an alliance that is no longer in Taiwan’s interest”.
8/ If you read the Chinese language publications on these matters they all council the latter, which is also in keeping with centuries of Chinese behaviour. Maybe this is 4D chess infowar to fool the West in preparation for the surprise attack. But that’s very improbable.
9/ When Americans get themselves riled up about an invasion they’re projecting their favourite strategy - gung ho General Patton military intervention - onto their rivals. But the truth is their rivals have watched this strategy in action and concluded it is self-defeating.
10/ The Americans will likely continue the invasion rhetoric. The arms manufacturers will appreciate it. But as the strategists wait for the Chinese invasion they’ll soon find they’re waiting for Godot.
11/ They’d be far better served looking coldly at the emerging balance of powers in the world and strategising accordingly. Question number one should be: “How do we maximise our position in this emerging constellation with the lowest risk strategy possible.”

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More from @philippilk

Oct 29
1/ Very interesting to look at how Germany, traditionally Europe’s powerhouse, and Spain, traditionally a laggard, are faring in the energy crisis. This tells us a lot about the viability of the single currency moving forward.
Short 🧵
2/ As we can see, Germany relies for its prosperity on very high current account surpluses but these have collapsed. Spain just about run a balanced current account and that has not changed.
3/ We shouldn’t judge this in absolute terms. The structures of each economy is used to a certain way of doing things. It’s the sharp fall in Germany’s current account - which has not happened in Spain - that is concerning.
Read 5 tweets
Oct 22
1/ Very brief 🧵 on what is required from LNG imports to Europe this winter to ensure seasonally normal gas imports.
2/ Here are total imports compared to last year. The poorly drawn black line with the arrow is where imports need to go in the coming weeks to maintain normalcy.
3/ Assuming Russian imports remain where they are - around 500 mcm - we need to replace an additional 2000 mcm. Note here Russian imports could fall further if Russia turn them off.
Read 6 tweets
Oct 21
1/ The LNG glut narrative seems to me pretty poorly substantiated.
2/ Here’s the relevant ‘chart’. It’s a bunch of arrows on a map. How are you supposed to interpret that exactly? Utterly incomprehensible.
3/ Here’s the attached argument. See I read that as saying that even at present levels - which do not clearly replace Russian piped gas - overwhelms the very limited infrastructure in Europe.
Read 4 tweets
Oct 20
1/🧵 on the likely outcome of the current political shake up in the United Kingdom.
2/ On the Tory side, it’s pretty obvious at this stage. The collapse of the party and the emergence of a more right-wing element of the sort @ClarkeMicah has long called for will likely happen. Perhaps not immediately due to egos, but in the coming months.
3/ Watching the economic collapse of the country in real-time will force the right to unite, no matter differences. Disaffected right-wing Tory MPs will join the bloc. Partly due to conviction, partly to save their bacon by getting off the Tory ticket.
Read 9 tweets
Oct 15
1/ Why the US economic strategy on China - i.e. punitive bans on key goods like semiconductors - makes no sense whatsoever. 🧵
2/ Firstly worth saying that this isn't a free market or free trade perspective. I was personally involved in questions of trade, reshoring and so on after Trump raised them in the 2016 election. I thought then, and I still think, that free trade is bad for the West.
3/ But recognising that free trade can result in a rival power eating your lunch does not mean that you simply start engaging in arbitrary economic warfare of the sort that the United States is currently engaged with vis-a-vis China.
Read 14 tweets
Oct 8
1/ Why @elonmusk is absolutely correct and some version of his plan must be adopted if America is to avoid complete economic and geopolitical collapse. 🧵
reuters.com/world/asia-pac…
2/ China has significant leverage over both the US financial architecture and over the dollar. These Chinese hold around $980bn of US Treasuries, or around 14% of total foreign-owned Treasuries.
3/ Treasuries are at the centre of the American financial system. Such a large sell-off would shake confidence in the market enormously. The Fed would then have to intervene and print dollars to buy them up. But then the dollar would start to crater.
Read 12 tweets

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