by Christian Whiton
There is an easy way to tell that the Ukraine war involves no vital U.S. national interests and that America will be worse off for its involvement: the international Left is in favor of our participation.
The last time the Left truly wanted America’s side to win a war was World War II. In that instance, the Left wanted to dispose of fascism, which was the leading totalitarian competitor to communism in the early 20th century. Subsequently the Left rooted against the USA in Vietnam, the Cold War, Kuwait, and Iraq. Only when no U.S. interests are involved does the Left want American war, such as pointless “humanitarian interventions” in places like Haiti.
Today, the Left wants America to carry the burden that Europe is once again shirking in deterring Russia militarily. How else can the failing neoliberal, globalist world view of the Davos crowd be saved?
Consider past instances when America has been called on to save Europe. In World War I, the British and French armies were badly bloodied by Germany, and newly Bolshevik Moscow was concluding a separate peace with Berlin. In the first day of the Battle of the Somme, Germans killed 20,000 British soldiers, and allied casualties in the battle alone would eventually exceed half a million. Britain and France were exhausted.
The situation was even more grim in World War II. By mid-1941, only Britain and the Soviet Union stood fighting Nazi Germany and both desperately needed and received American help to continue the resistance. The risk to America was that the entire rest of the industrialized world would be completely controlled by a hostile, expansionist axis.
Then came the third desperate call to America. In the early Cold War, when NATO was formed, the democracies of Western Europe had been liberated from the Nazis, but lay in ruins from the war and needed help even to feed their populations, much less rebuild their militaries. Only American assistance stood between them and Soviet domination. We defended them and accepted a trade arrangement that allowed higher European tariffs on U.S. goods than we had on theirs—a system that inexplicably continues to this day.
Unlike those three instances, no such dire need for American blood and treasure exists today. Europe is rich and stable. It has 400 million people and a $21 trillion economy compared to Russia’s 150 million people and $1.5 trillion economy. Germany alone has an economy twice the size of Russia’s. France and Britain have their own nuclear arsenals. Europe is as technologically advanced as America and can afford well armed, trained, and networked militaries. It should no longer need America to play any major role in its defense.
But America is playing a major role—in fact the predominant role in helping Ukraine. The Biden administration, not Europe, rushed unprecedented but sloppily designed sanctions out the door so quickly the weekend after Russia invaded that they caused an unintended energy crisis. Then Congress threw another $14 billion on the credit card to aid Ukraine without any real debate over the structure of aid or the risks that overtly sending materiel to the foes of nuclear-armed Russia could pose to the United States. (Recall that U.S. aid to Afghans resisting the Soviets in the 1980s was covert.) One of the risks of overt supply became more apparent on Saturday when Russia began targeting supply nodes in western Ukraine close to Poland. It is in our interest to increase the cost to Russia of conquering or dominating Ukraine, but not to the point that it risks a wider war.
This is what economists call creating a “moral hazard”—where other parties (the Europeans) increase their exposure to risk because they do not have to bear the costs of that risk. By paying for the military that Europeans could easily afford themselves, we have encouraged reckless conduct like adding parts of the former Soviet Union to NATO. Europe’s militaries are deficient because they can count on the Americans they otherwise disdain while stabbing us in the back on trade.
By all indications, Washington is just getting warmed up—both Democrats and Republicans, few of whom seem to have any idea of how to put America first. Biden has rushed more U.S. troops to NATO members like Poland and a plus-up for the militarily difficult-to-defend Baltics is likely next. If China was worried that the U.S. loss in Afghanistan would free Washington to focus on fielding the ships, planes, and missiles necessary to deter that rising power with more than one billion people, a $15 trillion economy, and a plan to topple American power, it can put its mind to rest.
Europe is deploying promising talking points that it has finally gotten religion about defending itself and accepting that the world is not run exclusively by postmodern metrosexuals. Germany has announced a 100 billion euro plan to rearm and says it will wean itself from Russian oil and gas. I have my doubts: the spending plan is fuzzy and will be spread over many years. I’ll bet that before long Berlin activates the new Nord Stream 2 gas pipeline from Russia. This will happen even faster if Russia and Ukraine reach a peace deal, which seems increasingly likely. Socialism isn’t cheap and who wants to pay higher prices for gas from America or the Gulf if Russia offers the best deal? Germany already prevented the expulsion of two major Russian banks from the SWIFT mechanism of cross-border banking. Why? In order to buy Russian oil and gas of course. The German government, which relies on the Greens to stay in power, has also refused to reverse plans to close the last three perfectly good nuclear power plants in Germany.
France never even said its companies would pull out of Russia, and by and large they haven’t. Turkey, which isn’t part of the European Union but is a part of NATO, with the grouping’s second-largest military behind the USA, is keeping its options open and will facilitate trade with Russia that does not depend on the U.S. dollar.
We are spending money we don’t have, subjecting the American people and our financial standing to extreme and unnecessary risks, killing our middle class with high energy costs and other inflation, and neglecting actual dangers like China and Iran (for which Europe is useless to us)—all because our bipartisan elite still thinks it is 1991 when we are the sole superpower, our government is on sound financial ground, and China is irrelevant.
The Coming Crisis
If those delusions were the only problem, the situation would merely be lamentable, presuming we don’t end up in a nuclear war. But Joe Biden and the rest of the ruling class have planted the seeds for an economic crisis that could rival the intense shocks of the 1970s.
With oil now well above $100 per barrel and overall inflation running at a 7.9% annual rate, the U.S. economy may very well be entering recession. This is compounded by the government’s intrusions in the economy, paying people not to work, destruction of tens of thousands of small businesses, and assault on meritocracy in business in order to achieve a woke society ordered on politics and race.
Furthermore, the Fed has no leeway to bail out the politicians who have caused this crisis. Unlike the front-end of most recessions when the Fed can cut interest rates, the Fed already has negative real rates (i.e., rates just above zero with inflation running 7.9%) and has clearly discovered the point at which expanding the money supply (creating dollars out of thin air) causes severe inflation. Fed action and government spending has created clear bubbles in housing, the stock market, and other assets.
In a piece worth reading, “A Recession Unlike Any Other,” ZeroHedge observes:
The following historical data indicates the level of the Fed Funds Rate just prior to the outset of all 10 U.S. recessions since WWII: 1957 3.5 percent, 1960 4.0 percent, 1969 10.5 percent, 1973 13.0 percent, 1979 16.01 percent, 1981 20.61 percent, 1989 10.71 percent, 2000 6.86 percent, 2007 5.31 percent, and 2019 2.45 percent.
In addition, the [coming] swoon in GDP will occur after the Fed has just finished printing $4.5 trillion over the past two years and with the national debt vaulting over $30 trillion due to the massive increase in government deficits in the wake of the COVID-19 pandemic. Such borrowing helped send the government’s debt to GDP ratio soaring to 125 percent. For perspective, that ratio was just 53 percent back in 1960, and only 58 percent as recently as 2000.
In other words, our big government, Keynesian methods of escaping the last two economic crises in 2008 and 2020—cutting interest rates, printing dollars, and increasing government spending—are already maxed out. Any more will lead to higher inflation. All of these activities should have been wound down when the initial shock and shutdowns of the pandemic ebbed in Q3 of 2020. But they have continued. We are approaching the part of the movie when the guy shooting the zombie runs out of bullets and prepares to throw the gun.
There is another alternative, which is to stimulate the private-sector economy by cutting taxes and regulations while holding the line on wasteful government spending. This created the Reagan and Trump booms. But it is against the Left’s religion and has no chance of being allowed as long as Democrats control anything.
What this means is that the downside risk to the stock market is severe. The market is overvalued. The price-to-earnings (P/E) ratio of the S&P 500 stands at 24—still high despite the recent decline in stocks. To reach its historical mean of 16 P/E, the S&P would have to drop 33% to about 2800. If one reasons that a P/E ratio of 20 is more appropriate given changes to the economy in recent decades when American business focused less on difficult manufacturing and more on higher-margin tech, financial services, and films about gay cowboys, the S&P would still need to decline 17% to a level of about 3500. However, in bear markets when new recessions become apparent, seldom does the market simply revert from overvalued to a historical average.
New World Order
There is a new world order afoot, but it is not the one about which the media and our ruling class fantasize. They see the Ukraine war as a grand vindication of Europe, Atlanticism, and the use of U.S. financial sanctions. Writing in the Wall Street Urinal, former John McCain staffer Richard Fontaine captured the fantasy:
By attacking Ukraine, Vladimir Putin may have brought about what he wanted least: a galvanized West, determined to act together to preserve a liberal world order.
Recent events more likely mark the death of globalism and post-Cold War neoliberalism. They are a harbinger of worse things to come, perhaps like the Spanish Civil War.
Consider the overall trends and emerging factors of power:
America is heavily indebted, suffering economically, and headed for recession and popping asset bubbles.
Europe will achieve the worst of all outcomes, paying much higher costs for energy in the near term while still depending on Russian energy in the long term. Europe’s long-term choice of decadent decline will be less decadent.
America will go from being distracted by fighting in Middle East backwaters to being distracted defending Europe. China and Iran will benefit.
Not only adversaries like Russia, China, and Iran but also India, Turkey, the Gulf states, and others that have declined to join Biden’s sanction program now have a motivation to end the U.S. dollar’s supremacy, which has existed since 1944. China, Russia, Turkey, and Iran are already experimenting with cross-border finance that does not use the dollar. This creates the risk of future financial crisis for the USA.
Oil has stabilized and may decline as it becomes clearer that Russian crude is reaching markets, even if to different customers. U.S. recession may tank oil prices, but they will rebound quickly because the ruling elite has talked down hydrocarbon investment in furtherance of their pagan religion, climate change alarmism. Energy-exporting Gulf states will be even richer.
Dubai and Singapore will gain as financial capitals, potentially growing beyond regional plays. London will suffer in reputation from seizing assets from private Russian citizens without due process.
Russia’s energy and commodity-focused economy will be restored within a few years, oriented more toward China, Turkey, and India.
Putin and Xi Jinping will probably outlast each of the western fools who populate the G7. Putin does not draw his support from oligarchs or liberal urbanites in Moscow and St. Petersburg.
Russia’s difficulties in rapidly conquering Ukraine will discourage future moves against the Baltics. It will invade Georgia if Tbilisi tries to join NATO. Moscow doesn’t need to move against the former Soviet stans since it already dominates them politically.
Washington under Biden won’t help Taiwan arm itself adequately. Taiwan needs a government more focused on capitalism and less focused on joining the globalist neoliberal clown show. Only the American Right and Japan will lift a finger for Taiwan.
Taiwan is not the only possible recipient of Chinese aggression.
Much of this is pessimistic for the USA, which is to be expected as the progressive side of the boomers exit the stage with a final flurry of failure, having previously undermined every institution in America. What began with Bill Clinton playing his saxophone ends with senile Joe Biden crapping his pants in an audience with the Pope.
But there is hope. American malaise will create a political opportunity for the New Right even greater than 2016. Like communism, progressivism just doesn’t work and its adherents seem to be creating the crisis that could shift our politics to a degree not seen since 1980 or even 1932. The Trump administration could end up as a just a poorly run foreshadow of a far-more effective movement by the New Right that will cut government, restore color-blind meritocracy, teach patriotism, and take our foreign policy back to the successful 19th century model of speaking softly, carrying a big stick, and intervening decisively only when America itself is clearly threatened.
An increasing portion of reporters in English-speaking countries are stupid and lazy. This reality reflects the trajectory of journalism from answering key questions about an event (who, what, when, where, why) to running political errands for the ruling elite. The latest example is reporting that Biden’s attempt to rejoin the flawed Iran nuclear deal is in trouble. The deal depends on Russia and has been negotiated in large part with Moscow acting as an intermediary with Tehran, which refuses to speak with us directly. Shockingly, the Russians are using this as leverage against us. They want trade with Iran, which is required by the deal, to be exempt from U.S. sanctions. Being Russian, of course they will negotiate for more than that. Since Washington says it will grant Russia no reprieve, the deal is supposedly in danger, although I am confident in Biden’s ability to get to yes eventually with the mullahs. Some are suggesting Russia be replaced in the deal.
But what exactly is this trade? That is a question no journalist seems to want to ask. The reason is because the answer is atrocious. Biden has included a poison pill in the deal at Iran’s request to try to prevent the next American president from pulling out of the agreement, as Donald Trump did in 2018. The trade involves Russia receiving uranium that Iran has enriched beyond acceptable levels, but agreeing to send it back immediately if the USA withdraws from the deal.
Pretty nifty eh? Our own diplomats have devised a plan for one of our adversaries to send another adversary enriched uranium if a future president doesn’t like a deal that allows Tehran to keep its advanced centrifuges to enrich uranium to weapons grade and otherwise enshrines Iran’s nuclear program. The give-back would also be triggered should a future president or Congress sanction Iran for any number of its malevolent activities like exporting terrorism, undermining friendly monarchies, planning a second Holocaust, or taking Americans hostage. But you won’t read that in the New York Times or the Wall Street Urinal, the latter of which is now running puff pieces on unfunny leftist Stephen Colbert.
Perhaps Biden can get North Korea to step in for Russia?
Ukraine and the Democrats
Speaking of choosing bad political partners, check out the bombshell report by RealClearInvestigations about Ukraine’s long-running collusion with the Democrat Party. In contrast to Russia’s picayune and ineffective foray into social media ahead of the 2016 presidential election, which made no difference, Ukraine has made several big and effective plays. You may have previously heard of some highlights like putting Hunter Biden on the state payroll and having people like the Fat Colonel, Ukrainian-born Alexander Vindman, in position at the White House to collude with a phony CIA whistleblower to get Donald Trump impeached. (Vindman was later offered the job of defense minister by Ukrainian leader Zelensky.) As it turns out, there is more. Have a look at the report. Given its predicament today, did Kiev choose poorly?
Government Hates Competition
Like most people, I’ve never bought or used cryptocurrency, but do keep an eye on it as a possible alternative to fiat currency issued by the Federal Reserve or other governments. Last week, the Biden administration issued an order to federal agencies to come up with new regulations for the industry. Writing in the Daily Caller, I argue that will lead to little more than a government shakedown of competition. Will it work? Take a look.