Forever Energy for War !!!

Moscow sees the Black Sea region as vital to its geoeconomic strategy to project Russian power and influence in the Mediterranean and makes southern Europe more dependent on Russian oil and gas.

The world is and has been clearly divided between the superpowers and the worlds’ dynamics are something to concern us, or it all this pass without any real consequences remains the mio-$$$ dollar question. You can argue both sides of the coin and I am hopeful heads wins, and not tails.

The only glue holding the thin paper together is the desire of world leaders to stabilise economic growth fearing any collapse will compromise leadership hopes. Right now we are turning warm weather into a hopeful delay of the ticking time bomb, namely energy. This war is focused on the power struggle between energy and control over energy – sorry it seems as if I am staying the obvious.

The energy focuses on Europe’s immediate needs and we all know in Germany, the wholesale price for electricity (paid by power traders on the market) more than tripled in 2021 reaching the highest level in 20 years. This means that between 2020 and 2021, the year-on-year increase in the price of electricity, gas and heating oil was the highest on record. The price of gas climbed by almost 50 percent, meaning an average household paid more than €1’700 last year, up from about €600 in 2020. We can only expect a rising cost for the time being as bottlenecks in energy supply at a time when the economy picks up again after a year of lockdowns in 2020 are the main reason behind the high prices in Europe and in 2021 and 2022. Shipments of LNG have not been able to alleviate the problem, as most of those are also bound for China and can only be re-directed when traders pay a hefty premium of up to 25 percent. 

Russia’s approach to the Black Sea builds on a centuries-old history of confrontation with Europe’s major powers and on Russia’s long geopolitical rivalry with Turkey. Its goals include warding off any threat from NATO, either to the Russian heartland or its strategic bastion in Crimea. It also wants to undermine NATO’s cohesion by trying to stoke fissures between alliance members along the Black Sea, and to prevent Ukraine and Georgia from joining the alliance.

We are in deep shit with oil and gas and more importantly the west is still facing global confrontations in the Sea of China: China’s sweeping claims of sovereignty over the sea—and the sea’s estimated 11 billion barrels of untapped oil and 190 trillion cubic feet of natural gas—have antagonized competing claimants Brunei, Indonesia, Malaysia, the Philippines, Taiwan, and Vietnam.

When I think of what is going on in the south sea of china and I shit myself:

22 Year US Old Destroyer in South Sea of China

Now sit back and take a deep breath as China screws our bottoms off with the deployment of an all new fleet:

The first Type-055 ship, Nanchang (101), was launched in June 2017 and formally inducted into the service in January 2020. Seven more have been built since then in Dalian and Shanghai. The eighth ship was launchedin August 2020. Lhasa is the second Type-055 stealth guided-missile destroyer.

I am not a military expert but from what I see is an eventual destabilisation in the struggle between the world’s super powers. China and Russia pushing the North Korean military goofball extraordinare, whatever they call him. He is still shooting and testing missiles and they are landing in the economic zone off Japan’s waters:

Maybe the forces of Russia aren’t a major threat despite the fact Putin has the capability to threaten the west with existential threats of nuclear war. I see the bigger picture as something we face sooner or later. The only saving grace it there is such a thing as the Chinese being pragmatic? Yes I believe so, they have an Asian control over taking the opportunity when we least expect it.

Now doesn’t seem like the right time to open a can of worms and provoke WWIII and knowing the Chinese have an arms reach all over the entire globe they do not need to provoke war, yet they will inflict a slow burn on the west.

We all know the Chinese have invested in infrastructure to secure resources and initiate their growth they must sustain a certain world order. That’s if the government is focused on growth over poetical and political ideology. I do believe China is in a difficult predicament and the tides can easily turn it the US decides to directly taunt China with sanctions, etc. The Russian issue is small in comparison to the South Sea conflicts and Taiwan.

Taiwan is soft spot for the Chinese and can become a political arena if and when China decides to pull the cord. The Chinese are pragmatic and manage their economy in a way which is way more impressive in comparison to the US. Probably because the Chinese make unilateral decisions as a CEO would running an important International conglomerate. Even Chrlie Munger one of the greatest American investors said the former Chinese paramount leader Deng Xiaoping was one of the world’s greatest leaders due to economic changes made during his tenure that opened up the nation to the West, modernized China and helped reduce poverty. Munger said he sees more value in China than in the US stock market and praised the country for being a modern nation.

The Chinese Renminbi was remarkably resilient against the appreciating USD in 2021. Given the growing divergence between U.S. and China monetary policy, I expect a weaker RMB to incrementally help with exports in light of the downward pressures on growth. China wants its currency, the yuan, to replace the U.S. dollar as the world’s global currency. That would give it more control over its economy. As China’s economic might grows, it’s taking steps to make that happen and to boot digital currency. China launched its pilot digital yuan on Tuesday, Jan. 4, 2022. The digital currency works through a mobile app, e-CNY, which is available on Android and Apple app stores. The app is still in a development phase and is restricted to select users such as domestic banks as China plans a nationwide rollout.

The growth of China still lies in real estate which drives around 25% of China’s GDP growth via its direct and indirect channels such as steel, cement, furniture, appliances, among others. The traditional growth drivers of the Chinese economy are consumption, investment and exports. Of these, consumption at the moment is hampered by COVID policies and global shortages as we see across the board.

Exports are largely dependent on global markets rather than Chinese policy and while the Chinese government has already said it will increase infrastructure investments, it will be difficult to reach the growth target with just increases in infrastructure. Thus, real estate is a key leg of the economic stool and needs to recover in order for China to hit its target growth rate of 5%.

But this is all small talk, money talk, and at anytime if China feels it is boxed into a corner by the US government it won’t end well. There is no doubt in my mind China is way ahead of the US in developing a strategic planning in capturing control of territories the same way Russia is doing. The two could easily coordinate their efforts in making the markets feel pain, but economical pain is something both China and Russia have lived through more or less by starving and killing their own people.

There is some hope in China deferring any wars and twice in the final months of the Trump administration, the country’s top military officer was so fearful that the president’s actions might spark a war with China that he moved urgently to avert armed conflict. In a pair of secret phone calls, Gen. Mark A. Milley, the chairman of the Joint Chiefs of Staff, assured his Chinese counterpart, Gen. Li Zuocheng of the People’s Liberation Army, that the United States would not strike, according to a new book by Washington Post associate editor Bob Woodward.

All of this leads back to the fact of material differences, a philosophical view, a political view on how the world has become divided and the global threats of war looming. The heightening alerts we feel by social media, I can’t help to think social media is driving us all into seeing a picture of imminent war. Is this war in the making, and we ignore the eventual outcome of history repeating itself, and will China focuses on its own economical prowess and avoid letting it happen.

No doubt the Trump era made it clear we are all fed up with how China is starving us over electronic goods but it will take a long time to catch up to the dependency we have on China, and I hold my breath in fear, yet I am hopeful the Chinese have enough common sense to wait. They can seize the opportunity via melting the west with their slow Chinese economical torture tactics instead of throwing their Navy’s missiles on our heads.

Categories: Facts