Tag: economics

Build a Reserve

If the recent blackouts weren’t sufficient warning to rely excessively on your credit and debit cards, this recent announcement by the Spanish government effectively limiting cash withdrawals to EUR 3,000 should catch your attention:

New rules in Spain: cash withdrawals over €3,000 under strict control. From now on, anyone withdrawing €3,000 or more from a Spanish bank must notify the Agencia Tributaria (Spain’s tax agency) in advance. If you’re planning to take out €100,000 or more, you’ll need to give at least 72 hours’ notice. For smaller sums over €3,000, a 24-hour notification is mandatory. The warning must be filed through the tax agency’s official website using a digital certificate, Cl@ve PIN, or electronic ID card. You’ll receive a receipt that must be shown at the bank when withdrawing your cash.

Translation: there may be a significant bank failure on the horizon that will inspire bank runs and other financial issues. I don’t think this is about trying to push everyone toward the cashless society, not so soon after the blackouts there when all the cards were useless.

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Sanctioning the Wrong Side

President Trump has completely failed to address the war in Ukraine in an appropriate manner capable of bringing it to an end, and now we’re back to the failed neocon strategies of the past:

The US has finalized a new set of economic sanctions targeting Russia as leverage to force Moscow to settle the Ukraine conflict, Reuters reported on Friday, citing several sources. It remains unclear, however, whether US President Donald Trump will approve the measures.

Earlier media reports suggested that Trump has not ruled out the sanctions if a ceasefire is not reached soon. On Monday, Moscow offered a 72-hour ceasefire from May 8 to 10, portraying the initiative as a chance to begin “direct negotiations with Kiev without preconditions.” Ukraine’s Vladimir Zelensky dismissed the overture as “manipulation,” insisting on a 30-day truce.

The targets of the new sanctions under discussion include state-owned Russian energy giant Gazprom and major entities involved in the natural resources and banking sectors, an administration official told the agency, without providing specifics.

Apparently the USA remains agreement-incapable under President Trump. At some point, Washington is going to realize that its rhetoric is no longer capable of reshaping reality, and that sanctions will never have the desired effect on major powers. But today is not that day.

If President Trump wants to end the war, he would do much, much better to sanction Ukraine and the EU.

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The Ports Shut Down

The once-busy port of Seattle has all but shut down.

The Port of Seattle on Sunday, April 27, 2025: EMPTY. This is the 4th busiest port in the nation. Inbound freight from China has STOPPED. Supply-chain disruption will now begin, nationwide. Anyone who has spent time in Seattle can tell you that these docks are always PACKED and the Puget Sound is usually overrun with waiting cargo vessels.

Here is the Marine-Tracker for Seattle: Waiting ships: ZERO. Inbound ships: ZERO. There are presently ZERO cargo ships docked or en-route. There are ZERO containers in the yard, and there are ZERO trucks waiting to haul cargo.

Even if this global trade war is ended tomorrow, it will take a minimum of 30 to 55 days, but more likely at 7-9 months, to normalize supply chains and have available product again. And that’s if everybody calls it off immediately. 40% of cargo vessels leaving China today (vessels that were already paid to make the journey, whether there is a reason to or not) are traveling completely empty. Inbound Shipping container volume is down 80%.

There were always going to be trade disruptions. This is a good time to get stocked up, top up supplies, and avoid travel and unnecessary expenses.

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You Don’t Get What You Pay For

Mercenary companies always sound very impressive. G4S is the flavor of the day, apparently

With roughly 800,000 employees, G4S maintains its own rapid response units – essentially private strike teams supported by in-house intelligence operations. Many Western PMCs now have access to reconnaissance aircraft, satellite data, and cutting-edge surveillance tools. “They work with corporations that provide satellite imagery, which has been used by PMCs in Africa, Iraq, and Afghanistan,” Todorovski explains.

Alexander Artemonov, a defense analyst at the Eurasia Heritage Foundation, estimates G4S maintains a fighting force of 250,000–280,000, equal to the number of troops Russia deployed in Donbass. The rest of the workforce consists of support staff, prison guards, and logistical teams.

G4S’s arsenal includes everything from AK-47s and Glock 17s to MP5s, sniper rifles, Uzi submachine guns, and even Israeli Hermes 450 drones. Their operatives have access to anti-personnel mines, grenade launchers, and portable anti-air systems. For mobility, they rely on armored Land Cruisers, Humvees, and military-grade carriers like the Cougar and RG-33.

“Mercenaries and auxiliaries are useless and dangerous; and if one holds his state based on these arms, he will stand neither firm nor safe” – Niccolo Machiavelli

As Machiavelli pointed out in his works, mercenaries are actually good at one thing and one thing only: getting paid. They’re not getting paid to fight and die, they’re getting paid to put on a good show and provide deterrence. The ideal mercenary operation is to get paid to defend a location or an individual, deter any attacks from taking place, and go home considerably richer in return for doing nothing.

It’s when they actually have to deliver results that mercenaries tend to show their true colors, as G4S already has:

G4S has also assumed control of prison facilities traditionally run by governments. In the UK, the company managed two immigration detention centers and six prisons, including those in Oakwood and Birmingham. In 2018, the Birmingham facility was returned to government control after inspectors uncovered appalling conditions: inmates roamed freely while staff locked themselves in offices; cells were filthy, infested with rats, and reeked of bodily fluids.

If they can’t manage a prison successfully, what are the odds that they’re even going to show up to fight Russian regulars?

Some might point to the successful use of the Wagner Company by Russia in the Donbass. But first, they were more convict conscripts than mercenaries proper, second, they were utilized as urban warfare cannon fodder, and third, they too showed the expected lack of reliability when Prigozhin staged the short-lived revolt against Moscow that ended his career with an accidentation.

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The End of the Middleman

The Internet has reduced the need for retailers and various rising costs have rendered their cut unviable, and increasingly, their businesses too, as Fandom Pulse chronicles the shutdown of Boardlandia:

It’s been a strange space in board gaming for the past several years as companies have turned to direct crowdfunding more and more, abandoning brick-and-mortar shops. While some online retailers have thrived by offering discounts, the industry received an artificial boost due to COVID-19, and a lot of gamers buying board games because they were stuck at home.

That boost faded, and now retailers have been in a precarious situation where most of the big sellers have all transitioned to direct crowdfunding, leaving little room for such retailers to exist. Enter the new tariffs, which have created a panic among board game companies who get their product from China. 

This is why, despite the various difficulties we’ve battled over the last few years, I’m confident that the direct infrastructure we’re still building is going to be the right way to go over the next decade or two.

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Pay Now or Pay More Later

The Chinese Global Times points out some of the obstacles that are facing the USA’s attempt to bring back the semiconductor industry:

The substantial losses incurred by Taiwan Semiconductor Manufacturing Co’s (TSMC) factory in the US state of Arizona illustrate both the consequences of ignoring market logic and the deep-seated difficulties the US faces in its attempt to forcibly restructure global semiconductor supply chains through political intervention. TSMC’s Arizona facility incurred a staggering loss of nearly NT$14.3 billion ($441 million) in 2024, the largest loss since the establishment of the US factory, Taiwan-based media outlet Economic Daily News reported on Monday, citing TSMC’s latest Annual General Meeting Report to shareholders. By contrast, TSMC’s factory in Nanjing, East China’s Jiangsu Province earned nearly NT$26 billion last year.

This financial disparity goes beyond a simple comparison of operational efficiency; it underscores the challenges of replicating TSMC’s traditional profitability model in the US, a market plagued by high costs and a fragmented supply chain.

TSMC’s Arizona struggles were predictable. It is no secret that the decision to build chip manufacturing plants in the US was never driven by commercial viability but by geopolitical pressure under the CHIPS Act. There are multiple causes for TSMC’s losses in Arizona. While the site has been in volume production since late 2024, the trajectory of financial deficits indicates that its problems are not temporary. 

A key factor is the disruption of the supply, industry and market chains. The semiconductor industry is a highly complex and intricate system where upstream and downstream companies are closely interdependent.  While the US excels in chip design, it lags significantly behind Asia, especially East Asia, in terms of the complete supply chain needed for manufacturing. TSMC’s Arizona factory relies heavily on importing key components and raw materials, which not only drives up logistics costs but also extends the supply cycle. Any hiccup in the supply chain can lead to production standstills.

All of these issues, problems, and challenges are real. And yet, what is the alternative? There is no alternative, unless the USA is willing to become dependent upon either a self-reliant USSR or the global manufacturing giant China for all of its digital devices?

The point is not efficiency or minimum cost; it’s the misplaced focus on efficiency and lowered costs that created this dilemma for the USA in the first place. The point is national sovereignty, particularly when war is increasingly going to be decided by large-scale high-tech drone manufacturing. It’s important to take market logic into account, but it’s even more important to avoid confusing market logic with national best interest.

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Who are the Reactionaries Now?

As comically unprincipled as conservatives are, liberals are even worse. Specifically, 2.86 times worse.

Support for free trade among American liberals has more than doubled since Donald Trump won his second term as US president in November, a study has suggested. During the election campaign, Trump accused America’s trade partners of ripping off the country and vowed to impose harsh duties on them. On April 2, he made good on his threat, announcing new “reciprocal” tariffs on nearly 90 countries, saying that it would raise revenues and boost the number of jobs in the US.

After global markets reacted by dropping sharply, the president put most of the tariffs on hold for 90 days, reducing them to a baseline rate of 10%. However, the pause does not apply to China, whose exports to the US are now subject to tariffs of up to 145% amid an ongoing tit-for-tat trade war.

A poll by Polarization Research Lab, first published by the Financial Times and actively shared by social media users on Friday, has suggested that “American attitudes towards free trade have rapidly polarized” over the past several months.

In early 2024, there was some 20% support for unrestricted exports and imports among both liberals and conservatives, the study said. However, the divide on the issue between the groups, which appeared in the run up to the election, has increased dramatically since Trump’s victory, it said. According to the poll, more than 40% of leftists surveyed now say that they “strongly approve” of free trade.

Meanwhile, the number of conservatives who support free trade has decreased, albeit not as sharply, with some 13% of them still favoring it, the study suggested.

In other words, 20 percent of liberals now SUPPORT the nonsensical, societally-destructive concept of free trade solely because President Trump is against it. Conversely, only 7 percent of former free trade-supporting conservatives have changed their mind on the topic.

A pox on both their retarded houses.

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Importing Taiwan’s Semiconductor Industry

There is a lot more going on in the trade war between the USA and China than just escalating tariff rates. The Chinese are obviously concerned that the US is going to essentially import all of Taiwan’s most valuable intellectual capital.

In response to media query on concerns on the Taiwan island over the US hollowing out its semiconductor industry are growing, Zhu Fenglian, a spokesperson for the Taiwan Affairs Office of the State Council, said that the concerns of Taiwan’s industry are not groundless. TSMC has long become a political pledge of the DPP authorities’ attempts to seek “Taiwan independence” by leaning on the US. It is only a matter of time before Taiwan’s semiconductor industry is handed over by Lai Ching-te, who is a “professional traitor of Taiwan.”

According to Reuters reports, TSMC and Intel recently discussed a preliminary agreement to form a joint venture to operate the US chipmaker’s factories. TSMC will take a 20 percent stake in the new company. Taiwan’s major chipmaker United Microelectronics and US-based GlobalFoundries are looking into the possibility of a merger.

As hard as it is to build, it falls as quickly as a spark sets hair on fire. If the DPP authorities are allowed to continue down the dangerous path of selling out Taiwan and ruining Taiwan, Taiwan’s industrial sector and the public will not only lose their current jobs, but also the opportunities for future development, said Zhu.

This is where trade war can lead to actual war. Remember, what President Trump is attempting to do is set up the USA in the best possible position for when the current international trade regime collapses entirely. Getting Taiwanese semiconductor companies to move to the USA would be a major coup, and it’s obviously one that the Chinese authorities will seek to prevent.

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Trade Deficit = Whip Hand

Donald Trump makes the textbook economics explicit:

The countries that deem US tariffs on their goods to be too high can just stop doing business with America altogether, President Donald Trump has suggested. He further insisted that his latest trade policies have made the US “strong,” bringing “billions of dollars a day” into its coffers.

On Wednesday, the US president slapped stiffer “reciprocal” tariffs on nearly 90 nations, only to announce a 90-day pause and a “substantially lowered Reciprocal Tariff during this period, of 10%,” in a post on his Truth Social platform several hours later. The pause however does not apply to China, with which the US has engaged in a tit-for-tat exchange of ever-higher tariffs, with most of Beijing’s imports now subject to a 145% duty.

Speaking to reporters aboard Air Force One on Friday, Trump proclaimed that “ultimately, we pretty much can do what we want to do. We can set the tariff, and they can choose not to deal with us, or they can choose to pay it,” he explained, asserting that “if they think it’s too high, they don’t have to do business with us.”

It’s a simple and obvious power equation. When you have nothing to lose, and you’re the one who owns the market in which everyone is interested, then you’re in control. No country with a trade surplus with the USA has any leverage at all, because the US is obviously better off not trading with it than continuing to trade with it on the basis of the system that has impoverished and hollowed-out the US economy.

This is why the threats of returning the favor are so empty and stupid. The USA would BENEFIT from pure autarky, so trade restrictions are not a viable threat. The President’s move is brilliant, because it not only protects the US markets, it prevents US companies from leaving the USA as well.

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Why China Can’t Win the Trade War

The US cannot win a military war against China. By the same token, China cannot win a trade war with the USA under the present circumstances. In addition to the fact that the nation with the trade surplus is the one with the weaker hand in a trade war, there is the situation regarding China being the leading holder of US debt.

And as J. Paul Getty is believed to have said: “If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”

In any event, here are the retaliatory measures reportedly being contemplated by China in response to the 104 percent tariffs imposed by the US government.

1) Retaliatory Tariff increases on U.S. Agricultural Products including Soybeans and Sorghum.

Whoop-de-damn doo. No one cares about the profitability of Big Agriculture. Feed it to the cattle.

2) Banning import of U.S. Poultry into China

Whoop-de-damn two. No one cares about the profitability of Big Agriculture. Lower prices on rotisserie chicken and at KFC are not things that fall into the problem category for Americans.

3) Suspending Sino-U.S. cooperation on Fentanyl-related issues

Whoop-de-damn three. There is nothing the Chinese can do, or should be expected to do, to stop Americans from taking illegal drugs.

4) Countermeasures in the Service related Sector

China already erected The Great Firewall. That card has been played.

5) Banning the import of US Films into China

Feature, not a bug. Burn Hollywood, burn.

6) Investigating the Intellectual Property Benefits of US Companies operating in China

It’s hard to threaten IP rights when there has never been any respect shown for them from the start.

China has already raised tariffs on US imports to 84 percent, which will effect pretty much zero Americans in any way, shape, or form.

That is a weak, weak hand that is arguably net beneficial to the USA. Frankly, I don’t see what China can do on the trade front that might even have the hope of accomplishing anything, although obviously it could choose to escalate to proxy military conflict in Ukraine, the Middle East, and the South China Sea.

It would be better to follow the lead of many smaller nations, refuse to retaliate, and accept President Trump’s invitation to negotiate for better terms. Because this really isn’t something that the USA can afford to back down on.

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