Michael Hudson: Putin’s Pivot to Asia

Yves here. Understandably, US reporting on the just-finished APEC summit focused on Obama’s objectives and supposed achievements. Russia has historically not been a major force in the region and thus received less coverage here. It was therefore surprising to see our man in Japan Clive tell us that Japanese media coverage of Putin at APEC was on a par with the column-inches given to Obama.

On Real News Network, Michael Hudson describes how Putin is shifting Russia’s export focus and economic alliances towards Asia, particularly China. This has been underway informally for a while but clearly became a higher priority after Europe, at US behest, imposed economic sanctions on Russia over Ukraine.

Hudson’s roundup of what Russia achieved in Asia, and the bigger implications for the US, is a tad more positive than circumstances warrant. I’d put this in the category of Putin doing a good job of making lemonade from lemons.

SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.

During this year a number of governments applied sanctions against Russia for its involvement in the alleged pro-Russian unrest in the Ukraine. Sanctions against Russia were applied by many countries, with the United States and the European Union taking a lead. In retaliation, Russia has responded with sanctions against a number of countries, including a total ban on food imports from the European Union, United States, Norway, Canada, and Australia.

What does all of this mean to Europe, the United States, and the geopolitical reconfigurations on trade pacts?

Here to discuss all of this is Michael Hudson. Michael is coming to us from New York City. He is the distinguished research professor of economics at the University of Missouri-Kansas City.

So, Michael, what’s going on this week in Beijing?

MICHAEL HUDSON, PROF. ECONOMICS, UMKC: The APEC meetings. In most such meetings for the last few years, including the G20 meetings (coming up in Brisbane this weekend) nothing really has been done. The United States is attending as the odd man out.

At issue are two different views of how economies should evolve. China is moving for its own trading bloc instead of being in a privatized pro-corporate bloc, it’s a mixed economy. So what you have is the Chinese economy growing very rapidly, and the American economy that’s been going flat.

In a situation like this there’s not really much to say. China and the United States have announced pretty much what they were going to do anyway and make it appear as if they’re all doing it in harmony.

President Obama was talking mainly to his American base, and to the Republican Party in particular to work on the Trans-Pacific Partnership. His vision is an agreement that will abolish government regulation of the environment, abolish regulation of banking, and implicitly nullify the Dodd-Frank Act. If a bank misbehaves or a government requires higher reserve requirements, then under the new international law that Mr. Obama is pushing, the government have to pay the private bank as if it weren’t regulated. And if a government imposes environmental fines on a company for polluting the environment, the government will have to pay the company whatever it would have made if it didn’t have any such fines.

The big news in the American press is that China has agreed to lower its air pollution. Well, of course China has to do this. If you’ve been in Beijing, you know it’s a polluted city. So this is just an announcement of where it’s going. Russia announced at the meetings a $400 billion 30-year gas deal with China to increase gas exports, with some oil also going to China. So China will scale back its coal plants, and there’ll be less coal smoke in the air.

Mr. Obama said that the United States is also going to cut back carbon emissions. But he’s still pushing for the XL Pipeline with Alberta to bring tar sands oil into the United States. That is the most high polluting activity on the planet.

What has been less talked about are the banking changes that have been announced.

PERIES: Before you move on, Michael, isn’t it a bit ironic that on one hand China signs an accord with the United States making a commitment to cut emissions, but on the other hand they’re making a deal with Russia that includes oil, a fossil fuel that will obviously increase emissions, not reduce them?

HUDSON: Every economy needs oil to some extent. China has to use oil for many things that gas simply won’t work for. Every country’s GDP goes up in keeping with its energy consumption. You could say the rise in productivity for the last hundred years, throughout the Industrial Revolution, has been an increase in energy use per worker or per unit of output. So it’s energy that’s pushing growth. And of course China needs oil. In fact, one of its problems is that when people are getting richer, they want to have cars, and they use gasoline. So of course China’s going to be dependent on oil from Russia.

Mr. Putin said that as a result of these deals, Russian trade with China and the rest of Asia is going to increase from 25 percent to 40 percent of Russia’s GDP. This leaves Europe out in the cold. What’s been clear at the meeting is that there’s a coming together between China and Russia. This has been the opposite of what American foreign policy has been trying to push for since the 1980s. What is ironic is that where the United States thought that it was putting pressure on Russia and sanctions following the NATO adventure in Ukraine, what it’s actually done is bring Russia and China closer together.

The most important way in which they’re coming together is reflected in Mr. Putin’s announcement that Russia is setting up its own bank clearing house system independent of the so-called SWIFT system. When you transfer funds from one bank to another, or when any bank uses U.S. dollars, it has to go through the SWIFT clearing house system in the United States.

Right now the only country that’s not part of this is Iran. To Russia, this has tipped America’s hand. It showed that what U.S. Cold Warriors really want is to break up Russia and China, and to interrupt their financial and banking services to disorient their economies. So Russia, China and Iran – and presumably other Asian countries – are now moving to establish their own currency clearing systems. To be independent of the SWIFT system and the U.S. dollar, Russia and China are denominating their trade and investments in rubles and yuan instead of the dollar. So what you’ve seen in the last few days in Beijing is a rejection of the dollar standard, and a rejection of American foreign policy behind it.

China has doubled its military spending since Mr. Obama was there in 2009. The president of China politely said, let’s make sure there’s not an accidental bang up in the air or on sea. What he means is, “We’ve defined our airspace over the islands that we’re claiming as ours, so if one of your planes comes too close to ours and we bump into it and knock it down, please don’t take this as an attack on America. We don’t really mean it personally.” So China’s really throwing its weight around.

That’s why Mr. Obama has looked so uncomfortable at these meetings. He knows that he hasn’t gotten anything he wants. Asian countries are not about to join the Trans-Pacific Partnership, and they’re moving on now to Brisbane, Australia.

In the next few days you’re going to see Europe being left out. The sanctions that the United States and NATO have insisted that it impose on Russia have led to Russian counter-sanctions against French and Baltic and European exports. French farmers are already demonstrating, and Marine Le Pen’s nationalists are likely to win the next election. The Baltic States are also screaming from losing their farm exports. France, Latvia, and even Germany had been looking to Russia as a growing market the last few years. Yet their leaders obeyed U.S. demands not to deal with the Russian market. This leaves Europe in a position of economic stagnation.

As for the sanctions isolating Russia economically, this is just what it needs to protect its industrial revival and economic independence. In conjunction with China, it’s integrating the Russian economy with that of China, Kazakhstan and Iran. Russia is now going to be building at least two atomic reactors in Iran. The center of global investment is shifting to Asia, leaving the United States out as well as Europe.

So you can expect at the G20 Brisbane meetings next week to increase pressure from Europe to break away from the U.S. sanctions. All the United States has diplomatically at the present time is military pressure, while Russia and China have economic growth – markets and investment opportunities opening up. Despite the fact that there was an agreement on high-technology trade between the United States and China, the U.S. is basically being left out. This seems to be why Mr. Obama was looking so out of sorts at the meetings. He knows that the strategy that he was given by his neocons is backfiring.

PERIES: Finally, Michael, how do you think this is going to be dealt with by Congress and a Republican-controlled Senate now?

HUDSON: Obama said that he looked forward to dealing with the Republicans now that he doesn’t have to deal with the Democrats anymore. Republicans are the only party that would agree to his pro-corporate, anti-labor Trans-Pacific Partnership. He has shown himself to be a Republican in the same spirit as Cheney and George W. Bush. The noises coming out of Washington from Harry Reid and the Democratic leadership are blaming Obama for mishandling the economy so badly and losing them the election – as if it were not their own doing and Steve Israel’s support for Republican-striped Democratic Blue Dog candidates. So if I can paraphrase what Obama essentially said, it’s “I’m a Republican and I’m supporting Wall Street.” He’s letting the Republicans know he’s pushing for the kind of giveaways that the lobbyists have written into the Trans-Pacific Partnership. I think you’ve had Lori Wallach on your show explaining exactly what this is. So you can expect Obama to move even more sharply to the right, getting Republican support while the Democrats pretend to scream in agony and say, “My God, what have we ever done with bringing this guy in?” – while supporting Hillary.

PERIES: Michael Hudson, as always, thank you so much for joining us.

HUDSON: It’s good to be here. Thank you very much.

PERIES: And thank you for joining us on The Real News Network.

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  1. James

    The president of China politely said, let’s make sure there’s not an accidental bang up in the air or on sea. What he means is, “We’ve defined our airspace over the islands that we’re claiming as ours, so if one of your planes comes too close to ours and we bump into it and knock it down, please don’t take this as an attack on America. We don’t really mean it personally.” So China’s really throwing its weight around.

    Hopefully, Michael sees the irony in that statement too. In fact, US foreign policy as a whole seems to have entered its post-ironic phase.

  2. MyLessThanPrimeBeef

    There was an earlier pivot to Asia when Nixon went to China.

    That was a not over-aggressive pivot. In the following decade, we won the cold war.

    Now we have a more aggressive pivot.

    It seems Putin’s pivot to Asia is more like the Nixon kind. We should expect them to exchange bears and pandas.

    1. MyLessThanPrimeBeef

      This is from Wiki:
      Su Qin (380 BCE-284 BCE), was an influential political strategist during the Warring States period of Chinese history (476-220 BCE). He was born in Chengxuan Village, Luoyang in present day Henan Province. According to legend Su Qin was a disciple of Gui Guzi, the founder of the School of Diplomacy. He was the chief advocate of the Vertical Alliance system, which sought to create an alliance of the other Chinese states against the state of Qin. The opposing theory, “Horizontal Alliance” (Chinese: 聯横; pinyin: Lían Héng) supported alliances with the State of Qin*.

      *My note: the State of Qin was the supreme hegemon at the time and went on to conquer ‘every place under the Heaven (Chinese Heaven only, presumably).’ :-(

      1. MyLessThanPrimeBeef

        By the way, there had been benevolent and tyrannical rulers in the State of Qin. The key to its eventual success was the reform of the Legalists who ensured enough money for its military spending.

        Today’s hegemon and all future hegemons will not have to be bothered with such reforms. There IS a way to make sure the state, any state, has as much to spend as it desires.

        And if you watch some of the movies coming out of China these days, you will see that the first emperor, who burned books and buried Confucian scholars (didn’t that also happen in Germany half a century ago), and killed millions, is seen, at least by some, to have done more good than evil… by preparing for conquest (war), he prevented future conquests (wars) – simultaneously – saving more (potentially) than he killed…and he unified the ‘world under the Heaven’…standardized weights and measures, facilitating ‘commerce’ (their version of neoliberalism?) and sent Chinese colonists into the four corners (into Yue, or Viet, i.e Fujian, Guangdong, Vietnam areas, and into what is Korea now), initiated GDP-stimulating projects (sounds familiar?) like constructing the Great Wall (many slaves were guaranteed ‘jobs’ at the frontiers) etc

        Ironically, his great GDP-stimulating project – building the Great Wall – led to the revolt of Chen She and the eventual dynastic downfall in only a few short years.

        1. Vatch

          My limited understanding is that Chin (Qin) Shi Huang, the first Chinese emperor, and his prime minister, Li Si, were the original totalitarians. People were organized into groups, and were expected to inform on each other. If someone in the group committed a crime, everyone in the group was punished.

          Does the end justify the means? I think it helps if we recognize that all “means” are also ends, although they occur prior to the originally conceived end. So one must decide which ends are more important. If millions are enslaved and hundreds of thousands or millions are murdered, that seems like a pretty evil end, and it’s very unlikely that a subsequent benevolent end will absolve the stain of the initial evil ends.

    2. James

      In the following decade, we won the cold war.

      We know one side gave up the fight for sure, and has since rebounded rather nicely. Whether or not we can say the other side actually “won” remains yet to be seen, since it’s still fighting against countless “enemies,” some possibly real, but most purely imaginary.

      1. Vatch

        Russia has rebounded thanks to petroleum and natural gas. That doesn’t alter the fact that it is a kleptocracy with severe problems of inequality. Putin is popular because he is standing up to the “foreign devils”.

        Of course, much of this is also true about the United States, but not the part about the leader being popular.

        1. James

          Putin is popular because he is standing up to the “foreign devils”.

          Well, I guess you could say that the US MIC is providing Putin with valuable marketing services then. I must say, they’re certainly worth every dollar, err… ruble he’s paying them.

          1. Vatch

            Mutual hostility usually benefits the elites of both nations. It is far less likely to benefit the typical citizens of the nations that are hostile to each other. On the contrary, it’s likely to worsen the lives of people in both nations.

            1. James

              I must say that as the initial coup unfolded after the Olympics I was wary of some sort of “joint disinformation” campaign on the part of both the US and Russia playing to some sort of higher regional goal. But events in the interim have led me to conclude otherwise. This one’s an entirely US instigated fiasco.

                1. Yves Smith Post author

                  Yes, the US supported a coup against a democratically elected leader. You are ignorant of that??? Lordie.

                  And elections were mere months away.

                  1. Vatch

                    First of all, my question was rhetorical. And no, the U.S. was not “entirely” responsible; the people of Ukraine opposed a corrupt administration and their president fled the country. The U.S. was heavily involved, but they were not the only cause. I keep trying to teach people that reality is complex, yet they still often want simple answers. Those simple answers, such as that the Ukrainian trouble is “entirely US instigated fiasco”, are usually, as in this case, false.

                    As I have explained many times over the past several months, the Ukrainians have enormous grievances against the Russians.

                    As things have turned out, Putin won, and the Ukrainians, of both the western part of the country and the eastern part, have lost. The easterners have lost because that’s where the fighting is.

                    1. S Brennan

                      I saw an error in your opening and I’ve fixed it below:
                      First of all, my question was disingenuous…

                      “The former Republican congressman and three-time presidential candidate Ron Paul has launched a scathing attack on what he calls a US-backed coup in Ukraine, insisting the Crimean people have the right to align their territory with Moscow and characterising sanctions against Russia as “an act of war”.

                      He also said providing economic aid to Ukraine was comparable to giving support to rebels in Syria knowing it would end up in the hands of al-Qaida.”

      2. myshkin

        Though the Soviet empire toppled first, the US empire has disastrously hollowed out its putative republic. The Cold War was a continuity of the dark inertia of the armaments based recovery of WWII, weaponry being the only public spending TPTB will ever countenance. I’ve argued with various older friends who had passed through the depression and WWII, who were convinced that the nuclear standoff and arms race of the Cold War was a great success, having forestalled nuclear annihilation.

        My point, that only a logic invented by Dr. Strangelove could view the march to the precipice of world war, armed with doomsday weapons, bought with national treasure, drained from the welfare of the people, as a success. It also countenanced or ignored the millions who did die, casualties of the Cold War that infected and inflamed corners of the world with proxy wars and anti democratic coups while baking the worst ingredients of a militarized, deep security state into the US sociocultural cake. It was evident to me but an unimaginable leap of faith to them.

  3. flora

    I think for at least the last 20 years Washington DC and Wall St have lived in a bubble that prevents them from seeing the real economy or effectively engaging in realpolitik. It gives me no happiness to write this.

    Thanks for this article.

  4. susan the other

    It is all interesting, amusing and frightening. And shameful if you once loved your country and the things it stood for. We have dealt ourselves a fatal blow by using the EU to sanction Russia. That’s gotta be the dumbest thing we ever did. We managed, in our arrogance, to isolate ourselves and our asinine cowboy neoliberalism, almost as if we built the great wall of America around our shores. Xi is a fox. So is Putin. The difference being that Putin once took a chance on trusting us. The worsening debacle in the EU is because we are imposing strict neoliberalism on them and are demanding they dismantle all forms of a mixed economy, while Xi, in Asia where anything of importance is now happening, calmly states the Chinese position that SOEs are OK if they are beneficial to the health of nations.

    1. susan the other

      So of course that raises the question, Why can’t the great United States survive in a mixed economy? Is it because our corporations are so distorted by their theft, productivity, efficiency, and labor-slashing pogroms, that they really have become absurd economically? Just a rhetorical question. Everybody, including Xi, knows the answer.

      1. Vatch

        Businesses in China are also distorted by various forms of evil. The hell of Foxconn and the air pollution of Beijing are just two examples.

          1. Vatch

            If you have spent any time reading comments here at NC, you would know that I am highly critical of many practices of American businesses. The way that Walmart and Amazon treat their employees is evil. And U.S. high tech companies are heavily implicated in the quasi-slave labor conditions in China. So your snide remark about “The Other” is completely uncalled for.

            I was responding to Susan’s implication that only U.S. businesses are distorted by multiple destructive practices. It’s possible that she did not mean that, but I thought it would be valuable to provide a reminder that big businesses in other countries are also destructive.

      1. susan the other

        Putin started off with Little George opening up oil development to US majors and they were both interested in making it go. Putin came to the White House and gave a little speech referencing this partnership. Etc. Some analysis (forget where, maybe foreign affairs) claimed Putin himself was a Russian Atlanticist – meaing his faction was leaning toward business relationships with the US and the EU. Then everything fell apart. It is hard to tell just how cooperative RU and we are these days. But yesterday at the G20 everybody ganged up on Putin and accused Russia of being the aggressor in Ukraine and Putin said he had more urgent business to take care of in Moscow and left. Putin himself has spoken clearly on the US and NATO being the aggressor and wanting to create crises to maintain power. So unless it is all theater, Putin did give it a try and became the goat. And now he has gone home.

  5. susan the other

    And it is frightening because the American Cyclops is flailing around and ready to go to war. We are encroaching on the oil fields of the Caspian (imo) with determination and subterfuge; manipulating the price of oil and gas; selling arms to the Middle East (amazing folly), and trying to create military alliances via trade blackmail (TPP and TAFTA). We just took a big share of PEMEX – god only knows how that happened and Pena Nieto will pay for it with a social uprising. We are strangling Venezuela, reputed to have the biggest oil field in the world. And Russia has sent it’s long range bombers on patrol over its oil interests, including “the Gulf of Mexico.” Which is their way of saying, Please get out of our business, or we will get into yours. It is the birth of chaos. Don’t think for a minute that intellectual giants like Johnny-get-your-gun McCain has any answers for resolving this crap peacefully.

  6. Banger

    The issue is not the U.S. vs. China and Russia. China and Russia are centrally governed nation-states with, at least for China, imperial ambitions–but these ambitions are of limited Empire not like the American dreams of Empire which is to control the entire globe not just politically but culturally. That ambition though is largely fantasy at least in political terms. The U.S. is not any longer what I would call a nation state with particular “interests.” Israel, for example, is more supported in the U.S. than, say, Ohio or some segment of the U.S. The USG sees its constituency as an international elite–whether British, Polish or Saudi–the people, as a population are, increasingly an afterthought. Washington is an international capital (as is NYC) that focuses on the multi-national corporation. Russia and China, while not immune to such pressures, does recognize the importance of the population or power-factions that are native to it.

    By forcing Russia, Iran and other states to the periphery they are moving them into a Chinese orbit. Now, how China chooses to react is something should make an interesting discussion.

    1. MyLessThanPrimeBeef

      It’s a Chinese ‘Vertical Alliance’ orbit

      If I am not mistaken, Gui Guzi was said to be also the teacher of Sun Bin, allegedly a descendent of (the Art of War) Sun Zi..

      One thing for sure – the Chinese don’t lack strategies. They have been playing this game, continually, for a long, long time. They are not some Johnny-Come-Lately at it, or empire/hegemon building….many of their neighboring victims can attest to that.

  7. James Levy

    I’ve argued to my students that the reason America is so dangerous is that Americans are the most ideological people on Earth without any understanding that they are ideological. Most Americans (certainly the foreign policy decision-makers) see doing anything dissimilar to the way “we” want it done as perverse (France), stupid (Venezuela), or malign (Iran). The old Burkean notion that nations are what they are because of their history and traditions is unthinkable in Washington or on Wall Street. America is the model and its up to every other country to conform–or else. Between Wilson and Truman a carapace formed over US thinking about itself and the world that has become impenetrable. It will only be burst when America is too broke or ecologically devastated to continue trying to re-form the world in its image. That’s why I fear that a whole cadre of nuts would rather the world go down in flames than that the “last, best hope of humanity” not get to “tutor” the nations into doing things the “right way.”

    1. Banger

      Technically you are right–the USA is the last great remnant of the great ideologies of the 20th century and the ideology of American Exceptionalism is related to fascism and communism in the sense it is deeply nationalistic and also global — America wants everyone to become American. But I think this is largely over. Leaders today only half-believe in these notions and the body politic is increasingly cynical and too self-centered to care much about “destiny” and the grand sweep of history that people like Henry Luce or Walter Lippmann articulated back in the day both on the left and the right. Government is increasingly staffed by self-serving careerists and yuppies who long ago sold their souls. The ideologues are now mainly are inarticulate and no more than the equivalent of soccer hooligans.

      1. Michael

        Neo-cons…. I assume that is who you meant.

        Not much more too add. The people with real power do not show their faces. They write memos and let buffoons try to articulate them to the public. The public will buy into the ideology because they’ve spent their lives learning facts with out learning the importance of those facts. Also most people are too busy trying to survive to learn enough to understand the games that the elites are playing. Hell, even the elites don’t understand the system they have built. All energy is basically used to maintain the system which will eventually collapse in on itself…I just hope I am self sufficient at this point….give me 5 more years and I should be set…homesteading is in my future.

      2. optimader

        “the USA is the last great remnant of the great ideologies of the 20th century’

        ” and the grand sweep of history that people like Henry Luce or Walter Lippmann articulated back in the day”

        Were Luce/Lippmann exclusive mouthpieces of their times or just two of many voices hacking for their choice of ideological flavor ??
        “Whether you like it or not, history is on our side. We will dig you in. (We will bury you.) ”
        “Comrades! We must abolish the cult of the individual decisively, once and for all. ”
        “If we can effectively kill the national pride and patriotism of just one generation, we will have won that country. Therefore we must continue propaganda abroad to undermine the loyalty of citizens in general and of teen-agers in particular. “

  8. susan the other

    I kinda think we are trying to keep Iran while forcing Russia into China’s orbit. And that explains Obama’s classic facial expression when he was panned by the camera as Xi said the umbrella demonstrations in Hong Kong were illegal and they were going to shoo them out. In that Obama is trying to be flexible. Body language is so much more revealing than spam.

  9. optimader

    “what it’s actually done is bring Russia and China closer together.”
    Maybe afterall, they deserve each other?
    I am not an advocate for US entanglement in foreign alliances but there seems to be a pretty health dose of historical revisionism by some residence hear at NC on the subject of who pursued who for inclusion in Former Warsaw Blok countries were vying for inclusion not the other way around.
    “…Another now-forgotten fact is that the George H. W. Bush administration did not want to see the USSR disintegrate at all, hoping that Mikhail Gorbachev’s gradual reform would succeed. In a speech delivered to the Ukrainian Parliament in early August 1991, and later dubbed “Chicken Kiev,” President Bush sent a clear message to the republics seeking independent statehood: “Freedom is not the same as independence… Americans will not support those who seek independence in order to replace a far-off tyranny with a local despotism.” The Bush administration’s fears of instability and violence that could ensue from the breakup were exacerbated by the presence of nuclear arms in Ukraine, Belarus, and Kazakhstan: an unraveled Soviet Union would become a “Yugoslavia with nukes,” in the words of then Secretary of State James Baker. ..”

    The notion that NATO/US somehow tricked Putin or Gorbechev is a revisionist meme.

    How many countries were ever vying for inclusion into the Warsaw pact?

    1. MaroonBulldog

      A little historical and geographical perspective: Three quarters of of Russian territory lies in Asia, not Europe. Russians started sending trade and commercial missions to China in the 1600’s. The two countries first began to conduct broader diplomatic negotiations in 1670. Putin’s so-called pivot is a natural further development in a relationship whose history is more than 100 years longer than the history of the United States of America. If Putin and Xi have an opportunity to do business, would anyone expect them to neglect it?

    2. susan the other

      Optimander, I’ve been puzzling over what looks like pretty erratic foreign policy on our part. When it comes to Russia it almost feels like the descriptions of how devious Churchill was, playing Hitler off against Stalin. Because the goal was to protect British imperialist interests. If the US goes down like the Twin Towers, the world also goes down. So I sense serious global cooperation from NATO and also from Russia and China. Go figure. The game I imagine being played is the one where we encourage Russia and China to come together to trade and treat because they are neighbors – but the real goal is to protect our Middle East empire by pushing China toward Russia. And thus divide up the world into two oil empires, one of which we can control.

  10. madisolation

    I just read Pepe Escobar’s take on the APEC summit. There’s a lot to absorb, but here is an excerpt:

    Washington/Wall Street elites – talk about Cold War hubris – always took for granted that Beijing and Moscow would be totally apart. Now puzzlement prevails. Note how the Obama administration’s “pivoting to Asia” has been completely erased from the narrative – after Beijing identified it for what it is: a warlike provocation. The new meme is “rebalance”.

    German businesses, for their part, are absolutely going bonkers with Xi’s New Silk Roads uniting Beijing to Berlin – crucially via Moscow. German politicians sooner rather than later will have to get the message.

    1. flora

      This sentence:
      “Washington/Wall Street elites… always took for granted that …”
      Perfect description of the neo-con and neo-liberal ideological bubbles. Elite thinking is so captured by their ideologies that they can’t clearly see facts on the ground, can’t effectively respond to the facts, and can’t accept their realpolitik failures as the consequence of their ideological capture. The ‘shrewd yankee’ has been replaced by the ‘true believer’.
      Interesting that Al From and the New Democrats have been described as idealists. No doubt they are.

  11. Whine Country

    Look, all of you are ignoring the history of success the US has had with imposing sanctions. For example, the sanctions imposed on Japan in the pre-WW2 period led to….uh, Pearl Harbor. Well, never mind.

  12. Steven

    Dr. Hudson has long had the right take on all this. But he doesn’t seem to be able to take the last step in simplifying his analyses and prescriptions. Elites in the West and in particular the United States have no clue about the real sources of wealth and power in the modern world. Those elites, having long ago converted their wealth (the natural resources, skilled labor and, above all, the inanimate energy required to power the machinery and computers that do much of the world’s real work) into money, now ‘keep score’ only by how much more money they can add to their bank accounts.

    For those elites – and especially for the financiers and bankers to whom they have entrusted the wealth extracted from the labor of preceding generations and the spoils of pillaged continents – money is all there is. This is the core of ‘American exceptionalism’. Anyone who doubts the omnipotence of money doubts the divine order of things. Educating, feeding and caring for the West’s “labouring cattle” has long been viewed not as ‘investment’, a source of wealth, but an impediment on the more rapid accumulation of money. The only thing 50% of ‘the people’ are good for, in the words of Jay Gould, is slaughtering the other 50%.

    The bottom line here is that real wealth and prosperity for the population at large represents a mortal threat for people whose power and social status is dependent only on money. A really wealthy population doesn’t need money. For the monetarily affluent, the only possible use for advances in science and technology is the destruction of those who refuse to worship the golden calf. For the last century Western nations have removed the threat of general prosperity to their ruling classes through wars with each other and beyond their nations’ borders.

    Devastated by global war, much of the world managed to free itself from this self-destructive propensity by exporting the responsibility to defend their money-based ruling classes and the sanctity of money as embodied in the world’s US dollar-based reserve currency to the United States. Thus we have arrived at the current division of labor in the world economy with the once ‘developing nations’ exporting the things people really need to live and the US and other Western nations exporting debt and death. This is the real mission of the military-industrial complex – absorbing advances in science and technology in ever more deadly weapons systems and ever mounting national debt. It can only end badly.

    Events since 2008 have proved the world doesn’t need the West’s money. If the West’s central banks can create tens of trillions of dollars, euros, yen, etc out of thin air to prevent the insolvency of its ruling elites, it can create the money it needs to pay for the real wealth required for a sustainable future.

    1. Steven

      The “last step” is dropping the ‘growth’ prescription. My suspicion is that a world economy purged of its waste, economic sabotage and above its weapons would be more than adequate at its current size for a long time to come.

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