Leon Aron | AEIdeas
Paul H. Kupiec | Hill
Vladimir Putin’s China Gamble
Leon Aron | AEIdeas
Federal Reserve Borrows $184 Billion Without Congressional Authorization, Circumventing the Debt Ceiling
Paul H. Kupiec | Hill
THE MELTDOWN, THE BAILOUT, AGAIN
Silicon Valley’s Lesson: How to Change Banking to Prevent Crises and Bailouts
By John H. Cochrane via The Hill
John Cochrane writes that the recent bailout of large depositors of Silicon Valley Bank demonstrates that the banking regulation system is fundamentally broken and has provided perverse incentives for financial institutions to take enormous risks at what is ultimately the taxpayer’s expense. As an alternative to the current system, Cochrane recommends that banks funnel all deposits and short-term debts into interest-paying reserves at the Fed and short-term Treasury investments. Such a policy, he argues, would end bank runs and ensure that there would always be money to satisfy depositors.
Tangled Up in Blue
City and state New York Democrats can’t decide what they stand for. Electoral reform could help clarify matters
Our Military Leaders Need a National Security ‘Fast Lane’ To Compete With China
By Mike Holmes & Dan Patt, The Hill: "The Chinese spy balloon incident highlights both the brashness of China’s military ambitions and the U.S. military’s struggle to counter China’s bold moves with new capabilities such as modern air surveillance tools."
China’s Future Ain’t What It Used To Be
by Josef Joffe via Tablet Magazine
In January, China’s National Bureau of Statistics made it official: After decades of fabulous GDP growth, the rate is now down to 3%. The culprit is Xi Jinping’s “zero-COVID” policy, plus ruptured supply chains and soaring energy prices. In the post-lockdown recovery, growth will of course bounce back, but not into the enduring double-digit rates prevailing since the 1980s, when China became the envy of the world.
Reports: Saudi Arabia to deposit $1 billion in Yemen’s central bank
The European Union also announced additional funding for Yemen, while a famine watchdog said that economic warfare is increasingly causing hardship for Yemenis.
Netanyahu advances judicial overhaul in Israel's Knesset
The government of Prime Minister Benjamin Netanyahu took the first step in getting its judicial reform adopted by the Knesset.
How To End Putin’s Forever War
quoting Stephen Kotkin via The Nation
In a wide-ranging and exceptionally thoughtful interview with The New Yorker, the historian Stephen Kotkin, best known as a biographer of Joseph Stalin, cast a cold eye on the notion that more of the same can lead to a negotiated peace. Kotkin notes that a war of attrition can continue indefinitely unless Russia’s military production capability—its ability “to resupply and produce more weapons”—is damaged.
Michael Rubin writes: Back to the present: Regime change in Iran will be difficult, but it is inevitable. Khamenei will die, and it is unclear any new ayatollah will be able to consolidate power. The Revolutionary Guards will play the role of the Russia-backed reactionaries of a century past as they intercede to stymie more liberal-minded politicians. It will be a tough fight—and very likely a violent one—but the sheer suspicion Iranians have of charismatic figures may ironically give them a second chance at democracy. After 115 years, they deserve one. – 19FortyFive
Michael Rubin writes: President Donald Trump betrayed Syrian Kurds in order to appease Erdogan. Despite Biden’s promise to resist Erdogan’s blackmail, the default position of his team remains to appease. If Biden wants to drive a nail into the coffin of the Islamic State and Iran’s destabilization of the Middle East, there is no other option. The strategic interest of the United States should be to support and reinforce Kurdish autonomy and the AANES. – 19FortyFive
Stanley Chao writes: Whether it’s throwing punches or doling out flowers, China is not really interested in ideological alliances or an international rules-based order. Whether you call it socialist market capitalism or pseudo-communism, China’s approach is one of a kind. Going it alone often begets chaos. It’s simply hard to predict China’s mood at any given time. Ultimately, however, Beijing does want to be a global citizen, just on its own terms. Expect surprises, good or bad, and then roll with the punches when they inevitably come. – The Hill
Former Pakistan Prime Minister Imran Khan was granted protective bail by a court in the eastern city of Lahore on Monday, providing him respite from arrest for two weeks in a case that involves charges under the country’s anti-terrorism laws. – Reuters
Chris Pope explains the mammoth task facing lawmakers as they attempt to curtail explosive federal spending and balance the budget in the next ten years.
Eritrea’s and Ethiopia’s Empty "African Solutions" Mantra
Michael Rubin | 19fortyfive.com
Fast Chinese Gross Domestic Product Is So Last Decade
Derek Scissors | AEIdeas
China’s Global Ambition And The US Response
by Elizabeth Economy via PolicyEd Hoover senior fellow Elizabeth Economy provides her perspective on Xi Jinping’s global ambitions and how likely he is to succeed in reaching them.
Nine Recommendations for Presidential Candidates on China Policy
Dan Blumenthal, Zack Cooper, and Derek Scissors | AEIdeas
There is bipartisan agreement that America’s next president will confront intensifying Sino-American competition and an aggressive People’s Republic of China. To develop comprehensive policy on how to approach the threats that China poses, Dan Blumenthal, Zack Cooper, and Derek Scissors put forth nine recommendations to presidential candidates. On the economic front, the US should ban Chinese participation in key supply chains, require the disclosure of lost intellectual property, and fully implement export controls. To deter military aggression, the US should replace strategic ambiguity, bolster military preparedness, and find ways to work with allies on technology issues. Lastly, the US can use all its recourses by creating a comprehensive counter-coercion strategy for Taiwan, go on the economic offensive against the Chinese Communist Party, and set up structures of collective defense in Asia.
Read more here. >> Learn about AEI’s New China Playbook here. >>
US “Guardrails” with China Are Shaky at Best
Hal Brands | Bloomberg Opinion
For much of 2022, America and China looked to be barreling toward conflict. As 2023 begins, Hal Brands notes that while the relationship has a new atmosphere, that will not last. Neither side is budging on its key interests, all the major disputes remain, and domestic politics are poised to play a spoiling role. What has emerged is a two-track relationship. Track one is intensified diplomacy, featuring renewed engagement on the climate and other transnational problems. The relationship’s second diplomatic track features ongoing and intensifying competition. Neither the US nor China has stopped seeing the other as its chief antagonist. Neither is slackening its efforts to strengthen its position. Continue here. >>
Defense Funding—Highlights from Fiscal Year 2023 to Inform Fiscal Year 2024
Elaine McCusker | AEIdeas
The new Congress must immediately begin performing its most critical duty—developing and debating defense policy and funding initiatives. Elaine McCusker provides three specific considerations for fiscal year 2024. First, cuts to the defense top line, particularly those that would revert to 2022 levels, would be irresponsible, wasteful, and dangerous. Second, as capacity is a capability of its own, and the current inventory of ships, planes, munitions, and ground assets is shrinking, procurement accounts should be a priority, even at the expense of research accounts if necessary. Lastly, Congress should gather real data on the impacts of three critical disruptors to the industrial base—inflation, workforce, and supply chain—to find spaces to save taxpayer money. Learn more here. >>
Turkey: Putin's Open Door for Harming Western Interests by Burak Bekdil
January 20, 2023
When Did Growth Begin? Evidence From England
by Jón Steinsson via Analysis
Over the past few hundred years, economic growth has transformed the standard of living of a large and growing portion of humanity. In the early nineteenth century, the vast majority of people lived in what we now consider extreme poverty. Today, however, the fraction of people living in extreme poverty has dropped to less than 10 percent and keeps falling. The main driver of this monumental change is economic growth.
Are We Beating China Economically?
Derek Scissors | National Review
Priorities for Economic Policy Toward China
Derek Scissors | AEIdeas
Increasing suspicion about China is causing many states to consider banning Chinese acquisition of US land. State governments can ban Chinese acquisition if they choose and it may prevent future problems, but it will do almost nothing to address our current economic vulnerability.
China's Rising Holdings of U.S. Agency Bonds
by Brad W. Setser
Iraq lowers dollar-dinar exchange rate
The Iraqi dinar has been depreciating against the dollar amid restrictions from the US Federal Reserve and other issues.
Economic Policy Working Group Reaches 15-Year Milestone in Providing Rigorous Policy Analysis and Solutions for American Prosperity
According to Hal Brands, PIVOT TO ASIA BEGINS
A Possible New Leader in the Global Economy
Allison Schrager, E21
The world is currently taking stock on the benefits of globalization, especially an overreliance on China which experienced spectacular growth in the last few decades. But China's economic future faces many challenges. Read more here....
Can a Staff Exodus Save Higher Ed?
If university administrators are unhappy, there’s the door.
The Master Negotiator?
By Javan David Frazier, Strategy Bridge: "The Gulf War, Tiananmen Square, the collapse of the Soviet Union and the end of communism in Europe, the Middle East peace process, and the ethnic fighting that erupted in Yugoslavia were just some of the challenges that Baker faced."
America and China: Whose Timeline Is It Anyway?
Dustin Walker | Breaking Defense
The International Monetary Fund’s Economic Crystal Ball Seems to Be Broken
Desmond Lachman | 19fortyfive.com
Attention, Joe Biden: China Is Trying to Create a Crisis with India
Michael Rubin | 19fortyfive.com
China and Russia Deepen Their Ties by Judith Bergman
CHINA'S ECONOMY FLAILING. . . AGAIN; NIGERIA & ARMENIA STILL HAVE ECONOMIC CHALLENGES
Three years of strict pandemic controls in China and a real estate crash have drained local government coffers, leaving authorities across the country struggling with mountains of debt. The problem has gotten so extreme that some cities are now unable to provide basic services, and the risk of default is rising. – CNN
Gordon G. Chang writes: China has continuing debt defaults, a stagnating economy, plunging property prices, worsening food shortages and a deteriorating environment, in addition to facing a viral outbreak that is “by far the world’s largest.” Moreover, the country has entered into a decades-long period of steep demographic decline. Xi is being blamed for all the problems confronting the regime, and that means the infighting in Beijing is bound to get worse. – The Hill
Middle East military rankings: Turkey highest, Lebanon lowest per global index
Turkey stands out as the most powerful country in terms of its military capacities in its region while Lebanon is the weakest, a global military strength index finds.
CHINA'S REOPENING: THE SLAUGHTER CONTINUES; MEXICO'S NARCO-TERROR STATE; BRAZIL REJECTS MARXISM
XI IS MAO; LONG COVID SLAUGHTERS THE CHINESE; NIGERIAN ELECTIONS AMID WEAK ECONOMY;
China’s Saudi visit reveals GCC goals for economic alternatives
China’s presidential visit to Saudi Arabia is expected to yield a host of deals as the GCC increasingly looks eastward on trade.
Russian delegation heads to Turkey amid potential Syria offensive
The top Turkish diplomat aired a rare complaint over the Russian stalling of constitutional talks between the warring Syrian actors, calling on Moscow to allow the process to resume.
Some Egyptian companies still dealing with Russia's alternative financial system
Some Egyptian companies are secretly dealing with a Russian alternative financial system, in anticipation of international sanctions by the United States.
MI’s Allison Schrager highlights the government’s mistake in assuming that interest rates would remain low when issuing massive short-term debt. The cheap debt dream has ended, and this wakeup call will serve as a lesson around locking in long-term low interest rates for governments and consumers alike.
Contrasting the rise of Amazon’s Jeff Bezos with Alibaba’s Jack Ma, Barthold points to the incompatibility of state direction with fast-moving innovation.
Is Stagflation Coming?
Allison Schrager, E21
The great resignation was good for workers while it lasted. The latest data from Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics reveals that quits have fallen over the last year after peaking during the pandemic. The number of job openings has also declined. This suggests a labor market that remains very tight, but has started to weaken. Read more here....
Gulf currencies pegged to dollar keep migrant workers’ families afloat
While the strong dollar has played in favor of Gulf migrant workers, they are not exempt from wage increases falling behind the inflation rate.
Saudi GDP growth continues on back of high oil prices
Saudi Arabia’s non-oil economy is also growing, boding well for its ambitious economic diversification projects.
Drug shortage adds to Tunisia’s woes
In light of the successive crises facing Tunisians, pharmacies across the country are suffering drug shortages, which the authorities are unable to resolve.
Egypt’s non-oil private sector records two years of contraction
The last time the Purchasing Managers Index, which offers insight into the private sector, recorded expansion in Egypt's economy was back in November 2020.
Egypt’s trade with Nile Basin countries jumps amid Ethiopia dam crisis
Cairo’s exports and imports with the region increased substantially in 2021, but they still represent a small portion of the total and growth remains uneven.
World Bank says debt increasing in Middle East countries
Egypt, Iran and Turkey’s debt rose significantly last year.
Iran top Central Bank official removed as unrest triggers currency crash
The dismissal of Iran's foreign exchange head follows the unprecedented depreciation of rial, following three months of anti-government protests.
US, Russia stall Turkey's ground operation, but Kurdish gains under threat
The Russian and US policies of appeasing Turkey have averted a new Turkish ground operation in Syria for now, but they both lay the ground for a gradual undoing of Kurdish gains in the north.
Gulf central banks raise interest rates after Fed move
Many Gulf nations have mirrored the US Federal Reserve’s decisions on interest rates all year. Israel and Egypt have also raised rates, but Turkey has been cutting — despite skyrocketing inflation.
Turkey’s economic growth loses steam as elections near
President Recep Tayyip Erdogan has persistently prioritized economic growth but might face the risk of stagnation ahead of Turkey's crucial elections next year.
The Caravan Issue 2237: Prospects For Lebanon
via The Caravan Issue 2237 of The Caravan is now available online. The journal is a periodic symposium on the contemporary dilemmas of the Greater Middle East.
"India Must Have Internal Harmony To Have External Security": Raghuram Rajan
interview with Raghuram Rajan via The Indian ExpressHoover Institution fellow Raghuram Rajan notes, "communal harmony and unity is something that the country needs, regardless of what political party you are in.”
NO REFORM! EGYPT'S MILITARY JUNTA FLOATS CURRENCY; ISRAELI BIBI WIN DIMS ECONOMIC REFORMS, SUDAN & LIBYA BEGIN RE-ENGAGEMENT ECONOMICALLY
Egypt reports increased trade with Arab states
Saudi Arabia is Egypt's top trading partner.
Netanyahu back with Israel's furthest-right government ever
About to establish his sixth government, Benjamin Netanyahu must partner exclusively with religious and far-right partners.
New wave of violence in Sudan puts coup generals in spotlight
Renewed fierce clashes in the Blue Nile state have again shown the generals’ inability to ensure security and revealed the weaknesses of the peace agreement in place, causing new rifts.
Libya derails Egypt-Turkey rapprochement
Egypt-Turkey talks to normalize their relations were halted in the wake of Ankara’s recent oil deal with Libya's Tripoli-based government.
Turkey turns up pressure on allies in Syria
Turkey is using the jihadis’ march into Afrin to push its rebel allies in Syria to reorganize as a coherent, disciplined force. But what happens next if the factions fail to do so by the reported year-end deadline?
THE TECH CLASS AND THE PRC
Erdogan looks to Putin to ease foreign currency woes
An extraordinary uptick in capital flows of unknown origin to Turkey has left many wondering whether Russian money could be involved.
Erdoğan Seeks Putin's Financial Help Ahead of Turkish Elections by Abdullah Bozkurt
September 13, 2022
WHO COMES AFTER XI?
TURKISH LIRA DEAD
Money inflows of unknown origin headed for record in Turkey
As Turkey’s current account deficit continues to widen in the coming months, foreign currency inflows of unknown origin might end up covering more than 70% of the gap.
Latest PRO Memo: Gulf states changing labor, visa and residency policies to attract foreign wealth, talent
Governments in Gulf Cooperation Council (GCC) member states are vying to attract global wealth and talent as part of post-coronavirus, oil-fueled economic development trajectories.
Jordan’s tourism revenue triples
The increase follows Syrians being able to travel easily to Jordan again.
Understanding Iraq’s Coordination Framework
With no end in sight to Iraq’s political deadlock, Mustafa Saadoun takes a closer look at the Coordination Framework, the largest Shiite bloc in Iraq’s parliament. The Iran-backed Framework has successfully kept populist Shiite cleric Moqtada al-Sadr and his allies from securing the two-thirds majority needed to select a new Iraqi president and ultimately form a government. To understand how, check out the parliament’s political makeup before and after the Sadr ordered the mass resignation of his MPs in June.
Second Fronts In Great-Power Conflicts
by Russell A. Berman, Michael R. Auslin via PolicyEdDeterring major conflicts or bringing them to a close often requires opening “second fronts” that dissipate an enemy’s strength.
How Wobbly Are the Finances of the World’s Major Governments?
James C. Capretta | Bulwark
As the world’s most powerful central banks adjust belatedly to the rapid acceleration of price inflation, it is worth comparing their fiscal situations to better anticipate what the coming months might hold for the global economy and for the politics of each of these countries. For many countries, the fiscal resilience trends look bad, says James C. Capretta.
Five Questions for Michael R. Strain on Inflation, Recession, and the Labor Market
James Pethokoukis and Michael R. Strain | @JimPethokoukis @MichaelRStrain | AEIdeas
What's driving inflation in the US economy? Are we teetering on the edge of a recession, and if so what would the recovery look like? Michael R. Strain and James Pethokoukis answer those questions and more and provide their insight into the economic outlook for the United States.
The Federal Reserve Is Creating A Deep Recession To Stop Inflation. That’s A Mistake.
Desmond Lachman | 19fortyfive.com
Shocking inflation numbers all but guarantee that the Federal Reserve will continue with its policy of aggressively raising interest rates and substantially reducing the size of its bloated balance sheet. Desmond Lachman says that this will raise the risk of a hard economic landing before year-end and further turmoil in financial markets.
The Economic Consequences of Jerome Powell
Desmond Lachman | National Review
Jerome Powell risks going down in history as the Federal Reserve’s worst chairman since the 1970s, Desmond Lachman says. He risks doing so by first having kept monetary policy too loose for too long as inflation quickly got out of control. He now risks allowing the same approach to cause him to slam on the monetary-policy brakes too hard to regain control over inflation.
TURKEY'S INFLATION RATE 100%
As Turkey’s economic woes worsen, a new currency crisis is approaching
Turkey’s economic problems continue to go from bad to worse. Its foreign trade deficit has reached a monthly average of $8 billion this year. Amid the sharp rise in global energy prices this spring following Russia’s invasion of Ukraine, the country’s average gross energy imports shot up from $3-4 billion per month to $7-8 billion. A reduction in energy imports and the recovery of tourism this summer have not offset this, and the current account deficit continues to widen.