Switzerland’s Return to Poverty

The once-neutral country chooses a course that will inevitably lead it toward economic and geopolitical irrelevance if it is not abandoned:

The Swiss government has adopted the latest set of European Union sanctions against Russia and Belarus over the war in Ukraine, including an embargo on crude oil imports and certain refined petroleum products from Russia.

The Federal Council on Friday decided to adopt the sixth package of sanctions agreed by EU countries on June 3. It includes an embargo that will be introduced progressively on all Russian crude oil delivered by sea to Europe from early December; a ban on all Russian refined oil products will be introduced two months later.

This is really unbelievable from a historical perspective. The Federal Council appears to have forgotten that for centuries, Switzerland was a very poor country that had virtually nothing to offer anyone except Alpine transit routes and its young men’s service as mercenaries. To this day, its national cuisine involves little more than bread and cheese.

Switzerland became wealthy as a result of two things: banking secrecy, and neutrality. It gave up the former under US pressure in 2010, and formally abandoned the latter in 2022. (One could reasonably make a case for it technically having done so when it joined the UN in 2002, but the more recent action is the more conclusive one.) Compounding the self-destructive effects of nuking its political neutrality, it actually did so on behalf of the losing party, which now almost guarantees that instead of serving as a central business connection between whatever replaces the declining neoliberal order in the former West and the rising Silk Road order in the North, South, and East, Switzerland’s current leaders have foolishly chosen to follow the lead of the increasingly irrelevant West European Co-Prosperity Sphere and taken the risk of rendering their country a very small and uncompetitive node on the wrong side of the Great Bifurcation.

This isn’t a prediction. This is an observation of a process that is already taking place.

For the past 200 years, Switzerland has been the number one financial center to attract wealth from other countries. Yet, it will unlikely be able to hang on to its pole position, as wealth increasingly flows to other places. And this isn’t the only area where Switzerland is falling behind.

Although Switzerland reaped the gains from 2021’s buoyant financial markets, growing 5.5 percent, the report points to more challenging years ahead for the financial center.

A big blow will come in the next four years when Switzerland falls out of the world’s top three financial centers, into fourth position behind the U.S., Hong Kong, and the U.K. in terms of onshore, cross-border and financial assets held. While Swiss financial assets are expected to grow 2.8 percent by 2026, the report says assets in the U.K. will rise by 3.3 percent (see below).

Switzerland will take another hit next year when Hong Kong overtakes it as the top financial center for cross-border wealth, ending Switzerland’s 200-dominance as the world’s strongest magnet for foreign wealth.

Switzerland Losing Ground Among Top Financial Centers, FINews

Going from neutral to reverse is no way forward.

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天音

The Chinese Ilk have created a translated variant of this blog, which is going to become increasingly important as it belatedly dawns upon everyone that the winner of the Russ-Ukrainian-NATO war and ultimate successor to the neo-liberal world order is China. That East Asian Studies major is turning out to be rather useful after all, although definitely not in the way I expected.

It’s going to be a long time, probably decades, before most Americans and Europeans understand, much less accept, this, of course. After all, there are still British people who genuinely believe that Great Britain is a major world power.

Welcome to Chung Kuo.

UPDATE: Chinese-speaking Ilk have also added a Simplified Chinese version on Weibo 天音 (微博).

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Sabres Rattling in the South China Sea

The Chinese are making it very clear that the USA will not be permitted to interfere the way it has with Ukraine in the event the Taiwanese irredentists declare independence from China.

Beijing will “not hesitate to start a war” if Taiwan declares independence, China’s defence minister warned his US counterpart on Friday (Jun 10), the latest salvo between the superpowers over the island. The warning came as Wei Fenghe held his first face-to-face meeting with US Defence Secretary Lloyd Austin on the sidelines of the Shangri-La Dialogue security summit in Singapore.

US-China tensions have been soaring over democratic, self-ruled Taiwan, which lives under constant threat of invasion by China. Beijing views the island as its territory and has vowed to one day seize it, by force if necessary.

Wei warned Austin that “if anyone dares to split Taiwan from China, the Chinese army will definitely not hesitate to start a war no matter the cost”, defence ministry spokesman Wu Qian quoted the minister as saying during the meeting.

The Chinese minister vowed that Beijing would “smash to smithereens any ‘Taiwan independence’ plot and resolutely uphold the unification of the motherland”, according to the Chinese defence ministry. He “stressed that Taiwan is China’s Taiwan … Using Taiwan to contain China will never prevail”, the ministry said.

At this point, it wouldn’t be a surprise if some sort of peaceful settlement were arranged before the end of the year, because the US and Europe are increasingly desperate to convince China to continue operating within the neoliberal economic order. And in the light of the complete failure of the Russian sanctions, the only card they have to play is offering to accept reunification as a fait accompli.

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A Little Late, Donald

Donald Trump stops listening to Ivanka nearly six years too late:

Donald Trump turned on his daughter Ivanka Trump after her testimony to the committee investigating the January 6th insurrection revealed she didn’t think the 2020 presidential election was rigged. In the clip of her interview to the committee that was played during Thursday’s primetime hearing, Ivanka backs up Trump Attorney General Bill Barr’s assertion that the election wasn’t stolen from her father.

‘I respect Attorney General Barr. So I accepted what he said — was saying,’ she says.

The former president said on Friday that Ivanka was ‘not involved in looking’ at the results of the 2020 election.

‘Ivanka Trump was not involved in looking at, or studying, Election results. She had long since checked out and was, in my opinion, only trying to be respectful to Bill Barr and his position as attorney general (he sucked),’ Trump wrote on Truth Social, the network he helped establish after he was banned from Twitter.

It was a shocking turn of events. Trump and his daughter were known for their close relationship and she was seen as his favorite child. She served as an adviser in his White House and Trump often said she could be president one day.

It’s a real pity he didn’t set both Ivanka and Jared aside when he was first elected to office. As political advisers, they were literally worse than useless.

And yes, the 2020 US presidential election was rigged even worse than the 2000 and 1960 elections. For example, there is literally ZERO chance that Joe Biden got more votes in Minnesota than Obama in 2008, Obama in 2012, and Hilary Clinton in 2016. Zero. You’d have to be entirely ignorant of statistics and statistical reality to even pretend that there were no shenanigans.

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So That’s Settled

ITEM: Ukraine’s president says the outcome of the battle for Sievierodonetsk will “decide the fate” of the entire Donbas region.

ITEM: Ukrainian troops may soon have to retreat from a key eastern city, the region’s governor and Western military analysts have said, as Russian advances force them back.

ITEM: Ukraine’s fortunes in defending Sievierodonetsk took a turn for the worse Wednesday, with its troops forced to retreat to the outskirts of the eastern industrial city in the face of a fierce Russian attack.

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The Collapsing Tripod

The Atlantic is not exactly a publication in which I have any trust whatsoever. But it is informative to note that even some of the most-hallowed mainstream media institutions are beginning to attempt to come to grips with the ineluctable fact that the economic order is on the verge of collapsing because the foundational principles upon which it rests have proven to be false.

The Anglo-American system of politics and economics, like any system, rests on certain principles and beliefs. But rather than acting as if these are the best principles, or the ones their societies prefer, Britons and Americans often act as if these were the only possible principles and no one, except in error, could choose any others. Political economics becomes an essentially religious question, subject to the standard drawback of any religion—the failure to understand why people outside the faith might act as they do.

To make this more specific: Today’s Anglo-American world view rests on the shoulders of three men. One is Isaac Newton, the father of modern science. One is Jean-Jacques Rousseau, the father of liberal political theory. (If we want to keep this purely Anglo-American, John Locke can serve in his place.) And one is Adam Smith, the father of laissez-faire economics. From these founding titans come the principles by which advanced society, in the Anglo-American view, is supposed to work. A society is supposed to understand the laws of nature as Newton outlined them. It is supposed to recognize the paramount dignity of the individual, thanks to Rousseau, Locke, and their followers. And it is supposed to recognize that the most prosperous future for the greatest number of people comes from the free workings of the market. So Adam Smith taught, with axioms that were enriched by David Ricardo, Alfred Marshall, and the other giants of neoclassical economics.

The most important thing about this summary is the moral equivalence of the various principles. Isaac Newton worked in the realm of fundamental science. Without saying so explicitly, today’s British and American economists act as if the economic principles they follow had a similar hard, provable, undebatable basis. If you don’t believe in the laws of physics—actions create reactions, the universe tends toward greater entropy—you are by definition irrational. And so with economics. If you don’t accept the views derived from Adam Smith—that free competition is ultimately best for all participants, that protection and interference are inherently wrong—then you are a flat-earther.

Outside the United States and Britain the matter looks quite different. About science there is no dispute. “Western” physics is the physics of the world. About politics there is more debate: with the rise of Asian economies some Asian political leaders, notably Lee Kuan Yew, of Singapore, and several cautious figures in Japan, have in effect been saying that Rousseau’s political philosophy is not necessarily the world’s philosophy. Societies may work best, Lee and others have said, if they pay less attention to the individual and more to the welfare of the group.

But the difference is largest when it comes to economics. In the non-Anglophone world Adam Smith is merely one of several theorists who had important ideas about organizing economies. In most of East Asia and continental Europe the study of economics is less theoretical than in England and America (which is why English-speakers monopolize Nobel Prizes) and more geared toward solving business problems.

First, Rousseau was always an absurd and nonsensical joke. Second, Steve Keen has mathematically proven the fundamental incorrectness of Adam Smith due to the unreliable nature of the collective demand curve. Third, List is not the solution to Smith, and for the same reason.

The hardest thing for even many of the people on the so-called ideological Right to accept – so-called because Left-Right ideology is incoherent, irrelevant, and entirely outmoded – is that the Enlightenment has proven to be an intellectual and philosophical dead end. Reason, at least in its human embodiment, has turned out to be irrational; all of the models and creeds and policies that rely upon the basic concept of human rationality have not only failed, but have been conclusively proven to be false.

It was simply inertia from Christendom that allowed the Enlightenment to pass itself off as progress. But the systematic eradication of Christianity from intellectual, professional, and public life combined with the adulteration of the European nations is finally overcoming that centuries-old inertia, to disastrous effect.

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Starve Harder

It will be informative to see the extent to which Russia cares about “international opinion” in light of the death sentences announced for three mercenaries employed by Ukraine:

International fury as two Brits Shaun Pinner, 48, and Aiden Aslin, 28, are sentenced to death by Russian separatists after they joined the Ukrainian army and were captured during the siege of Mariupol.

Brits Shaun Pinner, 48, and Aiden Aslin, 28, were captured in Ukraine in April during the siege of Mariupol. The so-called supreme court of the Donetsk People’s Republic (DPR) issued the death sentences on Thursday. Moroccan national Saaudun Brahim has also been sentenced, reports said. Video showed the trio in a cage.

The trio were accused of being ‘mercenaries’ after fighting for Ukraine’s armed forces in the battle for the city. Russian media reported that they would appeal. The court is not internationally recognised, the BBC reported. UK Foreign Secretary Liz Truss condemned the death sentences as a ‘sham judgment with absolutely no legitimacy’. No10 said it was ‘deeply concerned’.

I’m just curious what sort of leverage the “international community” thinks it has at this point. What are they going to do, pile on a few more sanctions, further inflate the currency, raise fuel prices, and starve harder?

I assume Russia will swoop in and make a useless gesture of magnanimity by trading the three mercs for three Russian prisoners-of-war, but it will be telling if it simply washes its hands of the affair and permits the DPR to fulfill the sentence.

And it’s certainly interesting to read the comments from British readers who genuinely want war with Russia over this. They really don’t grasp the fact that it’s not the 19th Century anymore and Britain no longer rules the waves.

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Historical Injustices

China is making it clear that it is not only aligned with Russia, but also with Palestine. And, one therefore has to assume, with Iran.

Al Jazeera: An international commission of inquiry set up by the UN Human Rights Council released an 18-page report today, saying that Israel’s occupation of Palestinian territory and discrimination against Palestinians are the root causes of recurrent tensions and protraction of conflict in the region. It also says that “Israel has no intention of ending the occupation”. What is China’s comment?

Zhao Lijian: The underlying reason for the recurring conflicts between Israel and Palestine and ongoing tensions over the occupied Palestinian territory is that the historical injustices done to the Palestinian people have been left unaddressed for too long and that the Palestinian people’s legitimate aspiration of establishing an independent state has long been denied. The international community needs to work more actively with a greater sense of urgency for an early resumption of peace talks between Palestine and Israel on the basis of the two-state solution, so as to achieve a comprehensive, just and lasting solution to the question of Palestine at an early date.

Zhao Lijian, Foreign Ministry, 8 June 2022

Conflict has a way of clarifying things. It would appear the Chinese didn’t take very kindly to the neocon plan to jump to China, or possibly India, in the aftermath of the USA’s economic collapse. And I am skeptical that hurling accusations of anti-semitism at the Chinese government is likely to favorably impress the Chinese.

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Forever Swept Away

Alastair Crooke points out that we are witnessing the end to what he describes as the neoliberal cosmopolitan economic order upon which globalization was constructed.

The First World War signalled the end to a mercantilist order that had evolved under the aegis of European powers. One hundred years later, a very different economic order was in place (neoliberal cosmopolitanism). Believed by its architects to be universal and everlasting, globalisation transfixed the world for an extended moment, but then started the subsidence from its zenith – precisely at the moment the West was giving vent to its triumphalism at the fall of the Berlin Wall. NATO – as the order’s regulatory system – addressed its attendant ‘identity crisis’ by pushing for eastward expansion toward Russia’s western borders, disregarding the guarantees it had given, and Moscow’s virulent objections.

This radical alienation of Russia triggered its pivot to China. Europe and the U.S. however, declined to consider issues of due ‘balance’ within global structures, and simply glossed over the realities of a world order in momentous metamorphosis: with the steady decline of the U.S. already apparent; with a European faux ‘unity’ that masked its own inherent imbalances; and in the context of a hyper-financialised economic structure which lethally sucked out the juice from the real economy.

The present war in Ukraine therefore simply is an adjunct – the accelerant to this existing process of ‘liberal order’ decomposition. It is not its centre. Fundamentally geo-strategic in their origin, the explosive dynamics to today’s disintegration can be seen as blowback from the mismatch from diverse peoples’ looking now to solutions tailored to suit their non-western civilisations, and from the western insistence on its ‘one size fits all’ Order. Ukraine thus is a symptom, but is not per se, the deeper disorder itself.

Tom Luongo has remarked – in connection with the ‘messy’, confusing events of today – that that which he fears most, is so many people analysing the intersection of geopolitics, markets and ideology, and doing so with such striking complacency. “There is a stunning amount of normalcy bias in the punditocracy, too much ‘cooler heads will prevail’ and not enough ‘everyone’s got a plan until they’re punched in the mouth’”.

What Luongo’s retort doesn’t fully explain is the shrillness, the outrage, with which any doubting of the accredited ‘punditocracy’ of the moment is met. Plainly, there is a deeper fear stalking the lower depths of western psyche that is not being made fully explicit.

Wolfgang Münchau, formerly at the Financial Times, now authoring EuroIntelligence, describes how such a canonised Zeitgeist implicitly has imprisoned Europe in a cage of adverse dynamics which threaten its economy, its autonomy, its globalism and its being.

Münchau relates how both the pandemic and Ukraine had taught him that it was one thing to proclaim an interconnected globalism ‘as cliché’, but “It is quite another to observe what actually happens on the ground when those connections get torn apart … Western sanctions were based on a formally correct, but misleading premise – one that I believed myself – at least up to a point: That Russia is more dependent on us than we are on Russia … Russia however is a provider of primary and secondary commodities, on which the world has become dependent. But when the largest exporter of those commodities disappears, the rest of the world experiences physical shortages and rising prices”. He continues:

“Did we think this through? Did the foreign ministries that drew up the sanctions discuss at any point what we would do if Russia were to blockade the Black Sea and not allow Ukrainian wheat to leave the ports?… Or, did we think we can adequately address a global starvation crisis by pointing the finger at Putin”?

“The lockdown taught us a lot about our vulnerability to supply chain shocks. It has reminded Europeans that there have only two routes to ship goods en masse to Asia and back: either by container, or by rail through Russia. We had no plan for a pandemic, no plan for a war, and no plan for when both are happening at the same time. The containers are stuck in Shanghai. The railways closed because of the war.

“I am not sure the west is ready to confront the consequences of its actions: persistent inflation, reduced industrial output, lower growth, and higher unemployment. To me, economic sanctions look like the last hurrah of a dysfunctional concept known as The West. The Ukraine war is a catalyst of massive de-globalisation”.

Münchau’s response is that unless we cut a deal with Putin, with the removal of sanctions as a component, he sees “a danger of the world becoming subject to two trading blocs: the west and the rest. Supply chains will be reorganised to stay within them. Russia’s energy, wheat, metals, and rare earths will still be consumed, but not here – We [just] keep with the Big Macs”.

So again, ‘one’ searches for an answer: Why are the Euro-élites so shrill, so passionate in their support for Ukraine? And risk heart-attack from the sheer vehemence of their hatred for Putin? After all, most Europeans and Americans until this year knew next-to-nought about Ukraine.

We know the answer: the deeper fear is that all the landmarks to liberal life – for reasons they do not understand – are about to be forever swept away.

The World Doesn’t Work That Way Anymore, Alastair Crooke

Note that this is not a prediction. This is an observation of what is already happening, of what is already in progress. It is the actualization of what I have been predicting since 2004. And it is now readily apparent that the 2033 scenario originally articulated 18 years ago remains very much in play. Cooke summarizes his observations in a single cogent paragraph.

Here is the point: The fixation with Ukraine essentially is but a gloss pasted over the realities of a global order in decomposition. The latter is the source of the wider disorder. Ukraine is but one small piece on the chess board, and its outcome will not fundamentally change that ‘reality’. Even a ‘win’ in Ukraine would not grant ‘immortality’ to the neoliberal rules-based order. The noxious fumes emanating from the global financial system are wholly unconnected to Ukraine – but are that much more significant for they go to the heart of the ‘disorder’ within the western ‘liberal order’.

And while I, like everyone else, remain uncertain about what will eventually replace the failing current order, I nevertheless anticipate the inevitable change due to the fact that lords of the neoliberal order have, in its incipient death throes, helpfully clarified for us precisely how wicked and awful and terrible it truly was while producing the fattest, most licentious, most solipsistic, and most credulous populations in human history.

Whatever difficulties and challenges the collapse of the neoliberal rules-based order poses us, we can be confident that they will not be worse than the horrors that were intended for us in a Clown World without end. It’s an unusually astute article, so read the whole thing, which tends to explain the panic implicit in the recent statement

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