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Communist China Has Thrown Out The Old Rules of War

Communist China Has Thrown Out The Old Rules of War

Authored by Robert Spalding via RealClear Books & Culture,

When I first read the…

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Communist China Has Thrown Out The Old Rules of War

Authored by Robert Spalding via RealClear Books & Culture,

When I first read the Chinese war manual “Unrestricted Warfare” in 1999, I thought it was wacky. I was flying B-2 Stealth bombers out of Whiteman Air Force Base in western Missouri and reading a lot about war. As an Air Force officer, I thought it was part of my day job to understand the bigger picture – even though the prevailing attitude in the military was “Just fly the planes.” “Unrestricted Warfare” was one of those books that caused a stir among some military folks because it had recently been translated into English. It had that insider whiff of mystery and secrets, a peek into the mind of the Chinese Communist Party.

(AP Photo/Pavel Golovkin, Pool)

Despite that mystique, not a lot of people were finishing the book. For one thing, regardless of its title, no one thought we were ever going to be fighting a war with China, so it seemed like a lot of work for very little payoff. For another, the book itself is not a light read. It is a dense compendium of strategy, economics, social theory, and futuristic thoughts about technology. It imparts centuries of military history, particularly as it relates to the United States, but I already knew a lot of that. It seemed vague and also a little sci-fi, not relevant to a U.S. bomber pilot – even one with a fascination for military history. My mistake.

If you look closely at everything China has done since 1999 – at all aspects of its economic, military, diplomatic, and technological relations with the rest of the world – it’s like watching “Unrestricted Warfare” come to life. One can find other glimpses into the secretive mentality of the CCP leaders, but this one is the single most important book for understanding the China of today. “Unrestricted Warfare” is the main blueprint for China’s efforts to unseat America as the world’s economic, political, and ideological leader. It shows exactly how a totalitarian nation set out to dominate the West through a comprehensive, long-term strategy that includes everything from corporate sabotage to cyberwarfare to dishonest diplomacy; from violations of international trade law and intellectual property law to calculated abuses of the global financial system. As one of the authors stated, “The only rule in ‘Unrestricted Warfare’ is that there are no rules.”

The book is the key to decoding China’s master plan for world domination, which has been progressing more steadily and successfully than most Americans realize – even accelerating in the reign of Xi Jinping. The manipulation of COVID policies, stonewalling the world about its origins, and mounting a massive disinformation campaign to blame the United States are merely recent examples.

So why is “Unrestricted Warfare” so obscure, even to people who study China professionally on behalf of the U.S. government, the Fortune 500, the investment world, the nonprofit world, academia, or the military? It’s not as if the book is some secret document that has never escaped the inner sanctum of the Chinese Communist Party. Just the opposite: The original translation by the U.S. government is in the public domain; you can google it and click on an English translation, for free, in less than a second.

The problem is that “Unrestricted Warfare” is hard to read. While any American can access it, few can understand it. The prose is dense and confusing, even in the original Mandarin, and even more so in that crude, free translation you’ll find on the web. Its insights are clouded by endless repetitions and meandering discursions into military history, cultural theory, and attacks on U.S. policy. The colonels, Qiao Liang and Wang Xiangsui, get tangled in semantics and draw on faulty citations and unsourced references. They obsess about the Persian Gulf War of 1990-91 to an extent that puzzles Americans who consider that war to be a minor footnote to history. And the authors’ metaphors are so weird to our ears as to seem utterly baffling. Just consider two chapter titles: “The War God’s Face Has Become Indistinct” and “What Do Americans Gain by Touching the Elephant?” Huh?

I mentioned “Unrestricted Warfare” several times in my previous book, “Stealth War: How China Took Over While America’s Elite Slept.” I noted that the book was well known to modern-day China scholars but that perhaps because of its strange complexity, Western strategists had failed to connect its strategic vision with the seemingly random actions of China’s misleadingly benign and smiling countenance. Although some of the text is pretty clear: “Using all means, including armed force or non-armed force, military and non-military, and lethal and non-lethal means to compel the enemy to accept one’s interest.”

As I wrote at the time, that strategy can justify meddling in all manner of another country’s affairs: silencing ideas or promoting political discord, stealing technology, dumping products to disrupt markets. I was intrigued with the idea of creating an “army” of academics who could be used to gather medical, technological, and engineering information. The list of incursions goes on – and has grown since then.

Consider just a small number of the things the Chinese Communists have done:

  • Seized on COVID as a weapon to be used to their benefit, not a humanitarian crisis to be solved.
     
  • Viewed the climate change issue as a bargaining chip to win them economic concessions from global elites in return for reforms that they never intend to make.
     
  • Sponsored corporate espionage on a scale beyond what the United States acknowledges.
     
  • Launched unrelenting cyberattacks against Western companies and governments.
     
  • Fueled America’s deadly fentanyl drug crisis by allowing illegal smuggling of banned substances.
     
  • Used slave labor to produce goods such as clothing for sale to Western shoppers.

Despite all of these actions by the CCP, since publication of “Stealth War,” I’ve encountered skepticism from some readers who simply can’t believe that China has been methodically undermining the rest of the world with a patient, long-term, multidisciplinary strategy. Some even dismissed “Stealth War” as the work of an alarmist.

In the wake of that reaction, I realized how useful it would be to make the Chinese manual of war accessible to American readers so that they can see it for themselves. I set out to write a user-friendly guide that would explain “Unrestricted Warfare” chapter by chapter, adding examples while editing out the irrelevant and distracting parts of the original text. In the process I’ve drawn on history, military strategy, and Chinese culture to explain the context in which “Unrestricted Warfare” was written and then applied. My goal is to show how “Unrestricted Warfare’s” advice to the leadership of the CCP maps with terrifying consistency onto the events of the past two decades.

This book has opened my eyes to how the CCP has essentially sneak attacked us in slow motion. And made me think hard about where they are going next. I hope it can have the same effect on others. I want to share with the men and women in our government, my respected former colleagues, who have to make some important – maybe life and death – decisions about how we deal with the Chinese government in the very near future.

I know it can seem excessive to compare any country with Nazi Germany. But as we rethink our views on China, what other comparison is appropriate for a regime that casually and cold-bloodedly allowed COVID-19 to spread to the rest of the world at the same time it was forcing its Muslim citizens into concentration camps? Hong Kong parallels the takeover of Austria in 1938. And how do you account for the increasingly warlike rhetoric and military movements directed at Taiwan?

Imagine the reaction during World War II if an American company had tried to export its goods to imperial Japan, or if a Wall Street firm had tried to underwrite the bonds of a Nazi arms manufacturer. Unthinkable, right? And yet today countless Americans are still trying to do business with and in China, misunderstanding or ignoring the CCP’s war without rules.

I am deeply concerned that the Biden administration, despite some positive moves, is seriously underestimating the malevolence and power of the Chinese threat. Our adversaries wrote up their long-term plans in 1999 and have been executing them relentlessly ever since. Our leaders have a moral obligation to understand what’s happening, sound the alarm, wake up the country, and inspire Americans of all political stripes to do everything in their power to stop this totalitarian regime.

I also want the average American to have access to this book. It’s time for every influential person in America – policy makers, diplomats, business executives, investors, journalists, scientists, academics, and more – to become part of the resistance to the Chinese Communist Party.

My hope is that by explaining “Unrestricted Warfare” and its consequences, this book will make it impossible for my fellow Americans to continue to deny the reality of our existential conflict with China. The simple, chilling truth is that the CCP is doing everything in its power – mostly via economics, technology, diplomacy, and the media, not yet via military power – to destroy our way of life. To understand that plan, you need to understand “Unrestricted Warfare.” The stakes couldn’t be higher.

*  *  *

Robert Spalding retired from the U.S. Air Force as a brigadier general after more than 25 years of service. He is the CEO of SEMPRE and the author of “War Without Rules: China's Playbook for Global Domination” (Sentinel, 2022).

Tyler Durden Fri, 04/22/2022 - 23:40

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“I Can’t Even Save”: Americans Are Getting Absolutely Crushed Under Enormous Debt Load

"I Can’t Even Save": Americans Are Getting Absolutely Crushed Under Enormous Debt Load

While Joe Biden insists that Americans are doing great…

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"I Can't Even Save": Americans Are Getting Absolutely Crushed Under Enormous Debt Load

While Joe Biden insists that Americans are doing great - suggesting in his State of the Union Address last week that "our economy is the envy of the world," Americans are being absolutely crushed by inflation (which the Biden admin blames on 'shrinkflation' and 'corporate greed'), and of course - crippling debt.

The signs are obvious. Last week we noted that banks' charge-offs are accelerating, and are now above pre-pandemic levels.

...and leading this increase are credit card loans - with delinquencies that haven't been this high since Q3 2011.

On top of that, while credit cards and nonfarm, nonresidential commercial real estate loans drove the quarterly increase in the noncurrent rate, residential mortgages drove the quarterly increase in the share of loans 30-89 days past due.

And while Biden and crew can spin all they want, an average of polls from RealClear Politics shows that just 40% of people approve of Biden's handling of the economy.

Crushed

On Friday, Bloomberg dug deeper into the effects of Biden's "envious" economy on Americans - specifically, how massive debt loads (credit cards and auto loans especially) are absolutely crushing people.

Two years after the Federal Reserve began hiking interest rates to tame prices, delinquency rates on credit cards and auto loans are the highest in more than a decade. For the first time on record, interest payments on those and other non-mortgage debts are as big a financial burden for US households as mortgage interest payments.

According to the report, this presents a difficult reality for millions of consumers who drive the US economy - "The era of high borrowing costs — however necessary to slow price increases — has a sting of its own that many families may feel for years to come, especially the ones that haven’t locked in cheap home loans."

The Fed, meanwhile, doesn't appear poised to cut rates until later this year.

According to a February paper from IMF and Harvard, the recent high cost of borrowing - something which isn't reflected in inflation figures, is at the heart of lackluster consumer sentiment despite inflation having moderated and a job market which has recovered (thanks to job gains almost entirely enjoyed by immigrants).

In short, the debt burden has made life under President Biden a constant struggle throughout America.

"I’m making the most money I've ever made, and I’m still living paycheck to paycheck," 40-year-old Denver resident Nikki Cimino told Bloomberg. Cimino is carrying a monthly mortgage of $1,650, and has $4,000 in credit card debt following a 2020 divorce.

Nikki CiminoPhotographer: Rachel Woolf/Bloomberg

"There's this wild disconnect between what people are experiencing and what economists are experiencing."

What's more, according to Wells Fargo, families have taken on debt at a comparatively fast rate - no doubt to sustain the same lifestyle as low rates and pandemic-era stimmies provided. In fact, it only took four years for households to set a record new debt level after paying down borrowings in 2021 when interest rates were near zero. 

Meanwhile, that increased debt load is exacerbated by credit card interest rates that have climbed to a record 22%, according to the Fed.

[P]art of the reason some Americans were able to take on a substantial load of non-mortgage debt is because they’d locked in home loans at ultra-low rates, leaving room on their balance sheets for other types of borrowing. The effective rate of interest on US mortgage debt was just 3.8% at the end of last year.

Yet the loans and interest payments can be a significant strain that shapes families’ spending choices. -Bloomberg

And of course, the highest-interest debt (credit cards) is hurting lower-income households the most, as tends to be the case.

The lowest earners also understandably had the biggest increase in credit card delinquencies.

"Many consumers are levered to the hilt — maxed out on debt and barely keeping their heads above water," Allan Schweitzer, a portfolio manager at credit-focused investment firm Beach Point Capital Management told Bloomberg. "They can dog paddle, if you will, but any uptick in unemployment or worsening of the economy could drive a pretty significant spike in defaults."

"We had more money when Trump was president," said Denise Nierzwicki, 69. She and her 72-year-old husband Paul have around $20,000 in debt spread across multiple cards - all of which have interest rates above 20%.

Denise and Paul Nierzwicki blame Biden for what they see as a gloomy economy and plan to vote for the Republican candidate in November.
Photographer: Jon Cherry/Bloomberg

During the pandemic, Denise lost her job and a business deal for a bar they owned in their hometown of Lexington, Kentucky. While they applied for Social Security to ease the pain, Denise is now working 50 hours a week at a restaurant. Despite this, they're barely scraping enough money together to service their debt.

The couple blames Biden for what they see as a gloomy economy and plans to vote for the Republican candidate in November. Denise routinely voted for Democrats up until about 2010, when she grew dissatisfied with Barack Obama’s economic stances, she said. Now, she supports Donald Trump because he lowered taxes and because of his policies on immigration. -Bloomberg

Meanwhile there's student loans - which are not able to be discharged in bankruptcy.

"I can't even save, I don't have a savings account," said 29-year-old in Columbus, Ohio resident Brittany Walling - who has around $80,000 in federal student loans, $20,000 in private debt from her undergraduate and graduate degrees, and $6,000 in credit card debt she accumulated over a six-month stretch in 2022 while she was unemployed.

"I just know that a lot of people are struggling, and things need to change," she told the outlet.

The only silver lining of note, according to Bloomberg, is that broad wage gains resulting in large paychecks has made it easier for people to throw money at credit card bills.

Yet, according to Wells Fargo economist Shannon Grein, "As rates rose in 2023, we avoided a slowdown due to spending that was very much tied to easy access to credit ... Now, credit has become harder to come by and more expensive."

According to Grein, the change has posed "a significant headwind to consumption."

Then there's the election

"Maybe the Fed is done hiking, but as long as rates stay on hold, you still have a passive tightening effect flowing down to the consumer and being exerted on the economy," she continued. "Those household dynamics are going to be a factor in the election this year."

Meanwhile, swing-state voters in a February Bloomberg/Morning Consult poll said they trust Trump more than Biden on interest rates and personal debt.

Reverberations

These 'headwinds' have M3 Partners' Moshin Meghji concerned.

"Any tightening there immediately hits the top line of companies," he said, noting that for heavily indebted companies that took on debt during years of easy borrowing, "there's no easy fix."

Tyler Durden Fri, 03/15/2024 - 18:00

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Copper Soars, Iron Ore Tumbles As Goldman Says “Copper’s Time Is Now”

Copper Soars, Iron Ore Tumbles As Goldman Says "Copper’s Time Is Now"

After languishing for the past two years in a tight range despite recurring…

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Copper Soars, Iron Ore Tumbles As Goldman Says "Copper's Time Is Now"

After languishing for the past two years in a tight range despite recurring speculation about declining global supply, copper has finally broken out, surging to the highest price in the past year, just shy of $9,000 a ton as supply cuts hit the market; At the same time the price of the world's "other" most important mined commodity has diverged, as iron ore has tumbled amid growing demand headwinds out of China's comatose housing sector where not even ghost cities are being built any more.

Copper surged almost 5% this week, ending a months-long spell of inertia, as investors focused on risks to supply at various global mines and smelters. As Bloomberg adds, traders also warmed to the idea that the worst of a global downturn is in the past, particularly for metals like copper that are increasingly used in electric vehicles and renewables.

Yet the commodity crash of recent years is hardly over, as signs of the headwinds in traditional industrial sectors are still all too obvious in the iron ore market, where futures fell below $100 a ton for the first time in seven months on Friday as investors bet that China’s years-long property crisis will run through 2024, keeping a lid on demand.

Indeed, while the mood surrounding copper has turned almost euphoric, sentiment on iron ore has soured since the conclusion of the latest National People’s Congress in Beijing, where the CCP set a 5% goal for economic growth, but offered few new measures that would boost infrastructure or other construction-intensive sectors.

As a result, the main steelmaking ingredient has shed more than 30% since early January as hopes of a meaningful revival in construction activity faded. Loss-making steel mills are buying less ore, and stockpiles are piling up at Chinese ports. The latest drop will embolden those who believe that the effects of President Xi Jinping’s property crackdown still have significant room to run, and that last year’s rally in iron ore may have been a false dawn.

Meanwhile, as Bloomberg notes, on Friday there were fresh signs that weakness in China’s industrial economy is hitting the copper market too, with stockpiles tracked by the Shanghai Futures Exchange surging to the highest level since the early days of the pandemic. The hope is that headwinds in traditional industrial areas will be offset by an ongoing surge in usage in electric vehicles and renewables.

And while industrial conditions in Europe and the US also look soft, there’s growing optimism about copper usage in India, where rising investment has helped fuel blowout growth rates of more than 8% — making it the fastest-growing major economy.

In any case, with the demand side of the equation still questionable, the main catalyst behind copper’s powerful rally is an unexpected tightening in global mine supplies, driven mainly by last year’s closure of a giant mine in Panama (discussed here), but there are also growing worries about output in Zambia, which is facing an El Niño-induced power crisis.

On Wednesday, copper prices jumped on huge volumes after smelters in China held a crisis meeting on how to cope with a sharp drop in processing fees following disruptions to supplies of mined ore. The group stopped short of coordinated production cuts, but pledged to re-arrange maintenance work, reduce runs and delay the startup of new projects. In the coming weeks investors will be watching Shanghai exchange inventories closely to gauge both the strength of demand and the extent of any capacity curtailments.

“The increase in SHFE stockpiles has been bigger than we’d anticipated, but we expect to see them coming down over the next few weeks,” Colin Hamilton, managing director for commodities research at BMO Capital Markets, said by phone. “If the pace of the inventory builds doesn’t start to slow, investors will start to question whether smelters are actually cutting and whether the impact of weak construction activity is starting to weigh more heavily on the market.”

* * *

Few have been as happy with the recent surge in copper prices as Goldman's commodity team, where copper has long been a preferred trade (even if it may have cost the former team head Jeff Currie his job due to his unbridled enthusiasm for copper in the past two years which saw many hedge fund clients suffer major losses).

As Goldman's Nicholas Snowdon writes in a note titled "Copper's time is now" (available to pro subscribers in the usual place)...

... there has been a "turn in the industrial cycle." Specifically according to the Goldman analyst, after a prolonged downturn, "incremental evidence now points to a bottoming out in the industrial cycle, with the global manufacturing PMI in expansion for the first time since September 2022." As a result, Goldman now expects copper to rise to $10,000/t by year-end and then $12,000/t by end of Q1-25.’

Here are the details:

Previous inflexions in global manufacturing cycles have been associated with subsequent sustained industrial metals upside, with copper and aluminium rising on average 25% and 9% over the next 12 months. Whilst seasonal surpluses have so far limited a tightening alignment at a micro level, we expect deficit inflexions to play out from quarter end, particularly for metals with severe supply binds. Supplemented by the influence of anticipated Fed easing ahead in a non-recessionary growth setting, another historically positive performance factor for metals, this should support further upside ahead with copper the headline act in this regard.

Goldman then turns to what it calls China's "green policy put":

Much of the recent focus on the “Two Sessions” event centred on the lack of significant broad stimulus, and in particular the limited property support. In our view it would be wrong – just as in 2022 and 2023 – to assume that this will result in weak onshore metals demand. Beijing’s emphasis on rapid growth in the metals intensive green economy, as an offset to property declines, continues to act as a policy put for green metals demand. After last year’s strong trends, evidence year-to-date is again supportive with aluminium and copper apparent demand rising 17% and 12% y/y respectively. Moreover, the potential for a ‘cash for clunkers’ initiative could provide meaningful right tail risk to that healthy demand base case. Yet there are also clear metal losers in this divergent policy setting, with ongoing pressure on property related steel demand generating recent sharp iron ore downside.

Meanwhile, Snowdon believes that the driver behind Goldman's long-running bullish view on copper - a global supply shock - continues:

Copper’s supply shock progresses. The metal with most significant upside potential is copper, in our view. The supply shock which began with aggressive concentrate destocking and then sharp mine supply downgrades last year, has now advanced to an increasing bind on metal production, as reflected in this week's China smelter supply rationing signal. With continued positive momentum in China's copper demand, a healthy refined import trend should generate a substantial ex-China refined deficit this year. With LME stocks having halved from Q4 peak, China’s imminent seasonal demand inflection should accelerate a path into extreme tightness by H2. Structural supply underinvestment, best reflected in peak mine supply we expect next year, implies that demand destruction will need to be the persistent solver on scarcity, an effect requiring substantially higher pricing than current, in our view. In this context, we maintain our view that the copper price will surge into next year (GSe 2025 $15,000/t average), expecting copper to rise to $10,000/t by year-end and then $12,000/t by end of Q1-25’

Another reason why Goldman is doubling down on its bullish copper outlook: gold.

The sharp rally in gold price since the beginning of March has ended the period of consolidation that had been present since late December. Whilst the initial catalyst for the break higher came from a (gold) supportive turn in US data and real rates, the move has been significantly amplified by short term systematic buying, which suggests less sticky upside. In this context, we expect gold to consolidate for now, with our economists near term view on rates and the dollar suggesting limited near-term catalysts for further upside momentum. Yet, a substantive retracement lower will also likely be limited by resilience in physical buying channels. Nonetheless, in the midterm we continue to hold a constructive view on gold underpinned by persistent strength in EM demand as well as eventual Fed easing, which should crucially reactivate the largely for now dormant ETF buying channel. In this context, we increase our average gold price forecast for 2024 from $2,090/toz to $2,180/toz, targeting a move to $2,300/toz by year-end.

Much more in the full Goldman note available to pro subs.

Tyler Durden Fri, 03/15/2024 - 14:25

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Moderna turns the spotlight on long Covid with new initiatives

Moderna’s latest Covid effort addresses the often-overlooked chronic condition of long Covid — and encourages vaccination to reduce risks. A digital…

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Moderna’s latest Covid effort addresses the often-overlooked chronic condition of long Covid — and encourages vaccination to reduce risks. A digital campaign debuted Friday along with a co-sponsored event in Detroit offering free CT scans, which will also be used in ongoing long Covid research.

In a new video, a young woman describes her three-year battle with long Covid, which includes losing her job, coping with multiple debilitating symptoms and dealing with the negative effects on her family. She ends by saying, “The only way to prevent long Covid is to not get Covid” along with an on-screen message about where to find Covid-19 vaccines through the vaccines.gov website.

Kate Cronin

“Last season we saw people would get a flu shot, but they didn’t always get a Covid shot,” said Moderna’s Chief Brand Officer Kate Cronin. “People should get their flu shot, but they should also get their Covid shot. There’s no risk of long flu, but there is the risk of long-term effects of Covid.”

It’s Moderna’s “first effort to really sound the alarm,” she said, and the debut coincides with the second annual Long Covid Awareness Day.

An estimated 17.6 million Americans are living with long Covid, according to the latest CDC data. About four million of them are out of work because of the condition, resulting in an estimated $170 billion in lost wages.

While HHS anted up $45 million in grants last year to expand long Covid support initiatives along with public health campaigns, the condition is still often ignored and underfunded.

“It’s not just about the initial infection of Covid, but also if you get it multiple times, your risks goes up significantly,” Cronin said. “It’s important that people understand that.”

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