CS

[CS @_SinnC]

This ends with a bloody nose for the ISR/ US military &their eventual withdrawal from the ME over the next decade or a nuke. There is no in between. Can't believe the Americans are going to lose Europe & the ME within the same decade.

[Gaurab Chakrabarti @Gaurab]

The United States has roughly two dozen people who know how to run rare earth solvent extraction at commercial scale. The Chinese Society of Rare Earths has over 100,000 members. In 2023, American mining engineering programs graduated 162 students. China graduated about 3,000 from 45 programs. Twelve US universities have shut down their mining engineering departments, including UC Berkeley and Ohio State. The Bureau of Mines, the federal agency responsible for mining research and training, was dissolved in 1996. Chinese pricing drove Western rare earth operations out of business through the 1990s and 2000s. The people who knew how to run those plants retired, changed industries, or died. Rare earth separation requires understanding how 17 chemically similar elements behave across hundreds of interconnected mixer-settler stages over months of continuous operation. That knowledge is accumulated through years of hands-on work in facilities the West stopped running. The average US mine worker is 46. 221,000 are expected to retire by 2029. Building an entirely new critical minerals supply chain means rebuilding the workforce that was eliminated a generation ago. The operational knowledge only comes back by running real plants.

[John Sakellariadis @johnnysaks130]

In rare public remarks, CIA Director John Ratcliffe announces trio of internal changes he says amounts to the "fundamental reshaping of the CIA’s entire approach to technology."

Also says it's not "misplaced" to refer to frontier AI as "akin to digital nuclear weapons."

[CS @_SinnC]

@suryakane They're basically saying decouple from China not from us, we're the benevolent imperialists

[CS @_SinnC]

@suryakane To put out this st. exactly one week after banning the export of Mythos is wild

[CS @_SinnC]

@TheMichaelEvery Ehh they never had any autonomy, but nor do they have the energy and manpower..

[CS @_SinnC]

@BaldingsWorld The issue is there in ZERO incentive to change the system, doesn't matter how many economists talk about consumption. As long as the world absorbs its surplus, Chn will continue its policies.

[CS @_SinnC]

@KSingh_1469 When you have Kaveri which is functional for drones, the world should be your oyster, but alas we refuse to live in reality

[Michael Pettis @michaelxpettis]

Tordoir and Klein are right in saying that the "best" way to resolve global imbalances is for Beijing to take steps (including currency revaluation) to raise the household share of GDP, but it is important to understand the reason "this feels far away".

It is not the Beijing has a special animus towards consumption, as any have argued. The claim that Beijing is ideologically opposed to allowing households more wealth relative to the state seems to have become an after-the-fact justification, both abroad and sometimes even in China.

But in fact other countries that pursued the same high-saving/high-investment growth model also ran into the same set of problems. Once they had closed their underinvestment gap, the economy shifted from rapid, healthy growth to less rapid, and increasingly unhealthy, growth, driven by excessive reliance on unproductive investment and trade surpluses.

They also recognized that they had to rebalance domestic income distribution towards households, but had the same difficulty that China currently has in rebalancing towards consumption. In every case, they were nonetheless forced to do so not because of foreign pressure but because the surging debt associated with the soaring non-productive investment and the manufacturing subsidies eventually became unsustainable.

The most obvious case is – as always – Japan, which formally recognized in 1986 (in the Maekawa Commission Report) that it had a serious problem with low consumption and said, with great fanfare, that it would take urgent steps to boost the consumption share of GDP.

In fact the consumption share of GDP didn't bottom out until 1991, five years later, and it took a further 17 years (until 2008), even under very accommodating global conditions, for Japan to raise its consumption share by 10 percentage points. This wasn't because Tokyo was ideologically opposed to consumption but rather because raising the consumption share required structural changes that undermined other parts of the economy.

Because the low consumption share was part of a growth model that also resulted in easily-available capital, a very forgiving banking system, and heavily-subsidized manufacturing, raising the former also meant reversing the latter. Everyone remembers that in the 17 years during which Japan raised its consumption share, GDP growth declined from roughly 4% in the previous decade to just over 0%. What analysts often don't remember is that during this time Japan's share of global manufacturing also declined by more than 50%.

That's the problem. As long as Beijing sets high GDP growth targets and as long as it wants to continue supporting the manufacturing sector (which, at this point, represents a larger share of the economy than even the property sector at its peak), the only way it can rebalance towards consumption is with huge – and perhaps politically disruptive – transfer of assets and income from local governments to households.

The point is that until Beijing either sharply lowers the GDP growth target (perhaps to 2%?) or forces the transfers to households, it can make all the promises it likes about raising the consumption share of GDP, and foreign policymakers can propose as often as they like that this is the only real solution to global imbalances, but it cannot happen.

That is why it is basically a waste of time for foreign policymakers to try to "convince" Beijing that they should stop opposing a rise in China's consumption share on ideological grounds. Beijing is not opposed to allowing Chinese households to have a better living standard. What they are opposed to is anything that might slow economic growth and undermine manufacturing, especially now when China already has a large problem with youth unemployment and overall underemployment.

[CS @_SinnC]

@BaldingsWorld And for all intents and purposes, job well done by the Chinese, they've been using member states to do their bidding for the better part of 3 years now (the first discussion of the EV tariff).

[CS @_SinnC]

@BaldingsWorld The answers to the 1st and 2nd questions are a resounding NO. Europe is a group of sovereign countries, who have outsourced national security (therefore foreign policy) to NATO. There is no such thing as sovereign EU, we'll have the dissolution of the EU before sovereign EU.

[CS @_SinnC]

@RushDoshi That ship sailed with Trump tariffs, maybe when the next Dem admin takes over they can do a better job than Biden/Trump. With the CA deficit acceleration, it's clear that without coherent industrial policy/content requirements tariffs are useless.

[Demetri @AsiaLens]

This is what Rubio said in 2022 when Apple was thinking of buying memory chips from China’s YMTC 👇🔥

[CS @_SinnC]

@fbermingham Why isn't common sense policy, common in Germany

[Russians With Attitude @RWApodcast]

Lavrov: “I don't even want to think about Alaska having been conceived to buy time to rearm Kiev, but it is what it is”

[CS @_SinnC]

@michaelxpettis Real question is did anybody expect differently? Specially after the 100% ++ tariffs of last year

[CS @_SinnC]

@TheresaAFallon The time to take the EU seriously will be when Germany finally takes some sort of action regarding energy. Before that it's all noise and they'll keep haemorrhaging jobs to China

[CS @_SinnC]

@michaelxpettis It's one of the biggest reasons the Chinese campaign of divide and conquer has worked so well

[CS @_SinnC]

@TheMichaelEvery If Vance et all were serious about the MOU and could actually get Netanyahu under control, they'd make sure that the $300B reconstruction funds were only allowed to be issued to American & ME companies...

[Brad Setser @Brad_Setser]

The rhetorical skills marshalled to defend open markets for China when China's own market is increasingly closed are impressive.

But they generally aren't grounded in actual data.

They are defending a world of exports and imports, not China's current reality (no import growth til q1 26, massive export growth)

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