McKinsey Study on ‘Short-Termism’: Nice But Inadequate

McKinsey works well within the strict confines of corporate culture; its myopic mores and clearly defined silos.  Although it presents its material holistically, it rarely trains its top faculties synoptically.  That’s because McKinsey’s top people are secular, they’ve never had to think outside the commanding heights of modernity; put another way, McKinsey cannot, will not strive to uncover the moral foundations of liberty.  More Hayek and Tocqueville, less Keynes.  Until McKinsey begins to articulate sources outside its dominant secular framework, it cannot hope to secure the kind of strategic clarity its clients seek.

Its latest research on economic growth and short-termism remains indicative of this problem.  How can one ignore the mounting (monetarist-Austrian) school of thought that fiscal policy has on reality.  Are McKinse-ites capable of discerning deeper competing theoretical trends in economics?  Why haven’t they been assimilated into Robert Bartley’s Seven Fat Years.  My guess is McKinsey doesn’t work outside dominant secular modes of thought; it will need to, if it is to secure strong intellectual, moral sources to ground its findings.

The past decade witnessed collapsing frameworks that underwrote hidebound central banks.  They tried zero interest rate policies, quantitative easing, and hosts of other tricks to conjure growth.  NOTHING.  Except for government and education, these clowns would have been shown the door.  Seeking the excuse of weather, earthquakes (Japan), secular stagnation, debt hangovers, demography etc. . . have exhausted the credibility of once vaunted institutions.

Why did it never occur to McKinsey to look at the social impact of confiscatory taxation?

Why does the average share in the S&P 500 index change hands every 200 days?  Why ignore the profound truth bestowed upon the followers of John Bogle, that the entire structure of contemporary finance is rent-seeking.  Wait, it gets worse.  Why is financialization easier than real growth.  Because what matters is the perception of growth evidenced on paper.  How do we know this?

The entire S&P 500 index shows that even the best companies with cash flow operate on slim margins; for every dollar of operating cashflow, companies spend 44 cents on capital investment (labor costs) and 56 cents on buy-backs and dividends.  Their gaming the books!

And their doing it because America isn’t the land of capital, equity formation anymore.  Our political economy is harnessed to the barrel of neoliberal thought, a parasite of government intervention that openly seeks the expropriation of civil society.

What did McKinsey show:  they revealed that any company that invests very little in its capital stock, cuts costs to boost marginal (paper/accounting) growth, does lots of buy-backs, books sales before payment or raids quarterly forecasts, exhibit fiscal trends of un-sustainability.

Here’s the truth:  the state of the U.S. economy is bad.  Really bad.  Our citizenry is exhausted, our industrial policy of depreciation has failed, our currency (although growing now) remains weak and we continue to permit Washington D.C. to expropriate the very source of renewal, our capital stock.

McKinsey needs to examine what underwrites our political economy.  It needs to talk politically about why the greatest nation on earth is on its knees.  Unless we examine the politics of our current fiscal state, we’re left listening to useful idiots like Lawrence Summers explain away our heritage.

McKinsey, call your office.

1q

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Hayek 2.0: A Supply Side Revolution Begins

If you’re a supply sider, monetarist or nominal GDP target economist, we’re about to enter familiar territory that, frankly, should never have been abandoned.  The reality is, its not 2017 but 1973 and Congress, the media and entire swaths of the professional ‘chatter class’ is about to reboot Reagan’s fiscal agenda except this time the opposition acknowledges familiar terrain; this kind of strength may endure but it will not help them win over future voters.  Multinational companies housed in the U.S. are bracing for major tax reform that will enable them to expense options immediately instead of drawing out lengthly depreciation dates; a bill that favors equity over debt and an environment that openly fosters liberty.  As we enter March, we need to brace for impact because the culture wars are about to heat up.

The U.S. dollar has experienced its sharpest rise ever since the lows of 2011.  Treasury yields have risen to nearly 2.5% and capital flows are increasing.  Even global financial and credit markets have exploded in size; the greenback, unlike the yuan, is more pivotal than ever.  This is evidenced in witnessing the surge the dollar has become in foreign financing.  We’re no longer seeing U.S. pension funds purchase foreign U.S. denominated debt, but the reverse in capital flows back to the U.S. is testing the resolve of foreign central banks.

A stronger greenback is reversing a cycle that began with ZIRP.  With zero interest rate policy plying money abroad in search of interest, it has returned with a vengeance; we’re witnessing foreigners husbanding local currencies to finance rising costs, as capital flows out, assets prices fall.  The result:  capital markets and indigenous credit markets are more dependent on the fortunes of the U.S. economy than every before.  The truth is:  we’re carrying everyone.  The downside:  authoritarian nation states like Turkey and Russia have large foreign denominated debt, mostly in short term T-bills.

It isn’t all good news for us either.  We should anticipate a widening of our trade deficit, only to be offset with massive capital inflows, low inflation, high productivity and social mobility.  Its happened before, it can happen again this spring.

The trick is to wade into currency arbitrate, carry trades or covered-interest-parity knowing full well that currency volatility is now unhinged from market fundamentals.  This was previously fixed with the Plaza Accord, but the underlying geopolitical rhetoric of the past two years has killed off any possibility of having an accord today.

The gloves are off, and the dominant political parties in D.C. are reaching for total reform of our tax code for growth; we’re moving toward a full scale downsizing of Keynesian ideology.

2q

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Mexican Trade Fears ARE REAL

When the President of Mexico considers his strategic position, he’ll notice something outside the raging Mexican nationalism that currently animates much of the population, he’ll notice a plunging peso and the consequent fear of losing out to a stronger, more versatile American partner.  This will not be an easy ride for any Mexican executive, but I countenance that even a strong leader like Augustin Carsten’s and his tenure at the Mexican Central Bank possesses limited manuvering regarding carry trades, floating exchange regimes, and volatile geopolitics.  This can end very badly for Mexico.

The peso has always been used by global financial institutions as the primary instrument for hedging, especially regarding emerging markets and variable risks associated with the developing world.  Why?  Well, the peso is by far the most liquid emerging market currency; one with few restrictions on trading.  The peso moves alongside the dollar and a few other major currencies, it also historically keeps apace with fluctuations in nominal policy movements by the U.S. Federal Reserve as well as nominal interest rates and commodities.

In recent months though, President Trump’s aggressive rhetoric have decoupled the peso from solid market fundamentals.  Although historically tied to Mexico’s stable export dependent economy, it now floats unanchored.   This isn’t good for either the U.S. nor Mexico.

As it now stands, interventions to prop up the peso have failed, instead of providing a floor to anchor or underwrite currencies associated with emerging markets, the Mexican peso has fallen nearly 6% in January alone.  This kind of volatility is eroding the peso’s appeal and effectiveness as a hedge in emerging markets.

If “the Donald” as done anything, he’s promoted currency manipulation.

2a

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Germany’s Current Account Surplus

We often forget that Germany (like the rest of Europe) is integrated or fused in a way that makes analysis of baskets of currencies difficult.  Here’s what I mean:  if Germany was to trade using its former Deutsche-mark and not the Euro, its currency rate or parity was register smaller imbalances. As of February 09th, Germany registered the world’s largest current account surplus, beating China.  Germany’s mercantilist policy of favoring Euro-denominated exports permits it to use a weak currency.

For team Trump, this is another reason to distain both our rules based economic order, the European Union and NATO, all remain bulwarks for German national consciousness. If anything, Asian geopolitical consciousness is far more agile than European. We simply don’t have viable replacements for the E.U. or NATO.  If Putin were to accept reform the Russian political economy out from its authoritarian trajectory, it is possible that market based solutions in Moscow could alleviate Germany’s dominant current account surplus by linking historical competitive animus between Moscow and Berlin.

As it stands now, Berlin really has a savings glut, investment gaps and wide swings in its VAT indices.  As it is with Japanese domestic industries, these are non-starters for Germany.

In the end, European nation states are going to have to begin reforming themselves and competing; this means ending the subsidies, the monopolies and the overt accommodative monetary policy that has only sought velocity at the expense of competitiveness.

Get ready for nationalism and volatility, a redo of 1973.  Is Volcker & Taylor ready for Bretton-Woods II?

3w

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The State of European Political Economy

When Francis Fukuyama stated that there was no higher form of historical development than the Western social democratic state, many laughed.  I actually lost my breadth laughing.  But when a person thinks in isolation or outside any sound dominant tradition (Leo Strauss, Harry Jaffa etc. . . ) you find yourself like Francis did, alone defending a filament that entirely misses both the moral foundations of liberty and the theological foundations of culture.  Being trained in the technique of political science akin to positivism renders one unable to discern nor defend the synoptic whole.  But then again, what else is tenure for??

Like the early 1970’s, the United States went through a profound crisis of mediocre leadership aggravated by the twin shock of the 1973 Yom Kippur War and its aftermath in the OPEC crisis; all of which was enveloped in the closing of the ‘gold window’ and the removal of fixed exchange rate regimes.  The whole thing would not be resolved until the early 1980’s under Reagan and Volcker.

With new influences at work in new arrangements, new forms of geopolitical, monetary, fiduciary underwriting, the world fractured in 1973 and the cleavages rent many of the formal institutions of government.  Its happening today, but the fault lines aren’t fracturing like they did in past decades.  Today’s shocks are the result of social, technological, demographic, even cultural changes that don’t register in positivist tones.

When the coachman of Europe, Prince Klemens von Metternich, sought to end the rule of egalitarian romantic revolutionary movements throughout Europe, he only had to conjoin a Concert of Europe.  Given a certain equanimity in the social base of European Christian civilization, a comity was easily reached and Napoleon thwarted.  What does one do to harness a reply to foreign influences that run outside the mores of ones culture.  When monetary, fiscal and instruments of war are useless in thwarting or assimilating an enemy, how does one command a center for harness, when there is no center to speak of.

When Bismark was dismissed after 28 years of service by the 31 year old German Emperor Wilhelm II, who could measure that Germany was fatefully placed in dangerously incapable hands?  Fearing encirclement in World War I and the twin enormities of both hyperinflation and social darwinism, the German volk happily invited a gotterdammerung worthy of any Greek tragedy.  It fell to the Americans to finally fix that Prussian menace.  Ditto for Japan and Russia.

The American’s are being called again now, to distant lands; we should remember Washington’s admonition of alliances and monsters abroad.  For if Germany, Japan, Russia and hosts of other first world nation states fell upon an altar of sacrifice under a democratic banner, the same could happen to the American’s.

We should also remember the achievements wrought under a Truman, Eisenhower, Kennedy or Reagan.  It isn’t all blackballing and violence.  Wasn’t the greatest European act of statesmanship prior to John Paul II, Adenauer’s rejection of Stalin’s offer of reunification in exchange for neutrality.  Even still, with Bismarck, Germany was hobbled by fractious divisions of its politics inviting a profound ambivalence of German ambitions that plays out today.  With Merkel, the moral, strategic condition of inferiority still afflicts Germany.

This Teutonic ambivalence plays out today between the Social Democrats & Christian Democrats.  Embedded deeply within the components of these coalitions are divided and dysfunctional national ambitions that cannot be reconciled.  As of this writing, the German political condition is unstable and untenable.  Merkel has squandered her ambition and strength in the admission of Syrian refugees; her profound delay in realizing how untenable her policy was, is fatal.

No matter what happens in the immediate German elections, it will take another generation of those born long after Merkel (1954) to ease Germany through the vacuum left by an imploding Third Reich.

The French Republic remains in a far more dangerous position than Germany.

The Platonic idealism animating the French Republic has found a home in jihadi Islam.  To stir the French out of their cynicism and impractical nature will require the very horrors jihadi’s are imposing upon the French Republic.  What the French need is a national goal of imaginative grandeur.  This isn’t something impossible for the French to conceive, but for Paris to conceive of it, it will need to contain, and evenly break the overt socialist tendencies that paralyze French politics.

Remember when De Gaulle took over a France mired in failed counterinsurgency in an imploding Algeria and failed Indochina.  De Gaulle gave strong leadership, a new currency and nuclear weapons.  He cut Algeria loose and worked with the American’s in Indochina under the pretense of holding firm to any German advance in the western Atlantic.

The French have never really recovered from the bombshell of Solzhenitsyn’s Gulag Archipelago nor Arthur Koestler’s Darkness at Noon.  Even still, the French have never taken appeals to national interest seriously.  For France to succeed in the near future, it must find a way out of a self-imposed socialist malaise.  Without addressing France’s paralyzing ennui, it is in permanent decline.

England has never recovered from the near suicidal defenestration of Thatcher in 1990.

When she was elected in 1979, the IMF had England in receivership with strict currency controls.  The top income tax rate was 98% with an unimaginably high corporate rate of 70%.  British industrial relations is where Maggie sought to lay her ax and her reputation.  It was a gamble, and she won big.  All this galvanized her stalwart positioning in the Falkland island dispute, only to strengthen Reagan’s ‘wobbly knees‘ in his own near fatal grasp of Soviet adventures in Afghanistan & Central America.  None of this was foreordained, and there remains much in contention socially and related to tax policy and its relation to deficits etc. . . In all, “we win they lose” won the day.  No one should expect that calculation to succeed again.

The west today is at an interregnum of weak leadership.  November of 2016 marked a profound fault line that Americans will not accept decline and have moved to upend an un-regenerative, reek seeking political class.

What Lincoln and others knew may come truth again:  the American’s are a warrior class and openly seek confrontation in a culture war whose patrimony is discerned in the American experiment that is liberty in equality.

4a

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India’s Elections: World’s Largest Democracy Fracturing

To say that India is fracturing isn’t groundbreaking news, its geography alone sustains cleavages that most nation states just simply couldn’t sustain.  With rivers running along an east-west continental strain and sidewinding railways, Indian consciousness was always turned inward towards the tip of its Oceanic peninsula; its back facing the Himalayas, its face toward the littoral, Indian consciousness is best embodied in its non-alignment posture.  A forced inward bound self-consciousness was broken in the northwest frontier.  It was Maulana Azad’s memoirs revealing the geologic design dominating British perfidy at having Mountbatten place two rival dominant Muslim majorities on India’s only continental openings (today’s Pakistan & Bangladesh).

Why does this matter?  By any calculation, India’s largest state, the Uttar Pradesh (UP) is home to nearly 200 million Indian Muslims.  The complexity of its politics, its plethora of faiths, castes, political allegiances cannot be contained in language.  It is best embodied and told by the overt garish nepotism, the boisterous rank criminality of UP rent-seeking. This raucous has affinity perhaps only in the Israeli Knesset.

Uttar Pradesh’s state capital is Lucknow.  Home to India’s lower house chamber called Lok Sabha, and India’s upper chamber, the Rajya Sabha.  Both had landslides favoring Modi in 2014.  This sweeping majority rule upended socialist majorities of the Indian Congress Party, an unlikely policy shift that no one foresaw.

Now with upcoming elections scheduled for six weeks beginning in late February, Modi’s BJP party hints at a looming defeat.  It wasn’t fore ordained.  Having the State Assembly Houses in Lucknow thwart the 2014 BJP landslide by minuscule majorities in the upper chamber is now about to play open to the Congress Party, effectively killing off market based reforms initiated by Modi.

Modi isn’t up for election again until 2019 where he will seek another five year term.  Until then, Modi’s BJP party has to count on overwhelming majorities in UP and five other smaller states (Manipur, Punjab, Goa, and Uttarakhand.)  If he succeeds, Modi’s Party can unleash a Hindu-Nationalist agenda that will violently envelop oligarchs in Lucknow upper chamber the Rajya Sabha.

Either way a fight to the death dominates India’s political economy and with it, a chance to address Islamabad’s civil-military relations, an emerging nationalist Beijing and militant Islamists moving down from McKinder’s Heartland, Central Asian nomads that can easily constrain both Moscow & Washington.

The gloves are off; my monies on Modi.

3q

 

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Russia’s New Weapon: A Torpedo Traveling 5K miles per hour.

Its called supercavitation.  The tip of the torpedo has a frontal device that blows bubbles of vapor (cavities) effectively permitting the torpedo faster propellent with almost no water drag.  The Russians have it and have perfected the technology.  Let’s review.

Russian naval engineers began experimenting with supercavitation in torpedo design about 40 years ago, designing and fielding these instruments for speeds close to 400 mph. Russians called this air-craft carrier killer the Shkval or squall.  Russian engineers began studying the effect cavities or bubble of vapor on propellers and blades.  Under the conditions of low pressure cavitation wears down blade propellers, so Russian designers began amplifying the phenomena.  They designed a torpedo with a blunt nose and flat disc that created a circular trailing edge throughout the entire forward moving body of the torpedo.  To create the bubble, they harnessed a rocket motor for extreme acceleration; in effect creating a very large, single, giant bubble which enveloped the entire torpedo except the steering fins.

The result is a weapon of war that experiences almost no hydro-dynamic drag, enhancing its velocity by magnitudes.

Here’s the limitations:  its effective range is severely limited to 15 kilometers; the Americans use torpedo’s (the Mk48) that sustain engaged range over 50 km. Secondly, it is loud so it can be detected.  Third, it has no tracking devices, so it cannot track, search nor contain any target.

Although the Germans and American firms have shelved plans or inquiries into supercavitation, Moscow has continued.

In October of 2016, Russia released new footage of its supercavitating torpedo called the Predator.  Russia is fielding a new frontal plate that isn’t flat but curved so as to harness sonar.  Tests throughout the Black Sea have registered torpedo speeds exceeding 5,000 miles per hour.  Many western engineers think the Russians are using lithium as the power source.

Its time for defense planners and Pentagon acquisition staff to get serious about our mission for ‘the Long War’, because the craftiness of our enemies is growing.

2w

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Inclusive Team Trump vs. Govmint Bureaucracy

The challenge playing out before our Republic regarding the so called Islamic ban of visa bearing individuals from Muslim nation states is the separation of powers doctrine and its consequences in derailing institutionalized comity in U.S. civil-military relations.  We’ve been here before, and the story never gets better.  Like Nixon and Reagan, Trump remains a perfect candidate, a fortress besieged by unelected government officials tethered to unions and other arcana, not subject to his authority.  And like Nixon and Reagan, team Trump will begin to feel an impersonal vice on his governing hand, his agenda cut off, his voice din and reach small, IF he and his team don’t start learning Washington politics.

The federal courts in the state of Washington & Minnesota are challenging the Presidents executive order for a 90 day stay of visas from Islamic nation states, identical states procured for the Obama administration.  By subjecting the separation of powers doctrine and the plenary power enumerated into federal supremacy regarding immigration and war, the agencies have set themselves up as final unelected arbiters of our Constitutional Republic.

This begs the question:  what is the Constitutional status of federal agencies.  Because they remain creations of the executive branch and remain funded by Congress, it isn’t clear of their place in our Constitutional structure relative to the separation of powers.  Just who does the EPA work for?

The founders invited or left deliberately vague the actual demarcated division between the branches, even though all reserved power is enumerated.  Why is this the case?  Because the founders knew that they were dealing with a relation, not an object.  Constitutionally speaking, the status of federal agencies is that they aren’t Constitutional, yet they retain their authority from the Executive and from Congress, even though Congress cannot ever delegate enumerated power reserved to itself.

The fact isn’t difficult to discern, the State department has long been a completely dysfunctional arm of the Executive.  It operates as a monolithic fiefdom.  For Presidents and others to be effective they’ve resorted to transferring operational authority to the National Security Council, to individual members of the vaunted policy planning staff at State; even Defense department combatant commanders have elaborate staff, this says nothing about the intelligence community.

Where does team Trump begin.

He begins by fighting to remove the union membership status of federal agencies.  Trump and his team have got to do politics “on the Hill” if their going to win.  Why?  Because the opposition will seek impeachment if they sense a disoriented executive.

While Trump sets his sights on Republican majorities in the House for legislation removing union status of federal workers, National Security advisor Flynn must place the day to day operational staff of State within the interagency process.  After four years, this is what State should have achieved in strengthening the President.

A Russia that openly seeks cooperation with American interests in counter-terror operations globally.

A China that ends its threatening behavior in the South China Sea while engaging a constructive role in the world economy and policing of the commons.

A North Korea demilitarized.

An Iran that no longer openly seeks confrontation of U.S. assets in international waters. An openly threatened nuclear proliferation network beginning with Iran and its encirclement of North America by Quods agents throughout South/Central America.

A liberalized Saudi political economy that leads in the reformation of Islam.

A reformed foreign assistance program that focuses on political reform of economies too weak or foreign to the mores of a market based economy.

After four years, State could begin to retake its previous leadership role as the authority of U.S. foreign policy.  That would mean truly creative policy making that is not only diplomatic but joint-interagency with defense civilian leadership.

For team Trump to succeed he’ll need to ask or demand of State that it seek to field new regional alliances, to condition foreign assistance with regimes like Pakistan, and the expansion of covert operations globally.

It would mean ending career officials who see their job outside the parameters of our Constitutional Republic.

It means fixing the broken instrument of diplomacy that has become the U.S. Department of State.

'Miss Carruthers, check and see if we have an extradition treaty with Disneyland.'

 

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The Shia of Bahrain & Failed Arab Spring

Home to the United States 5th fleet, securing the Arabian Sea, Persian Gulf, Red Sea and significant parts of the Indian Ocean, Bahraini’s are unfortunate to live in Saudi Arabia’s eastern island, wedged in between Saudi perfidy and U.S. reluctance, the Shia in Bahrain have been defeated, but will not stand down.  Its an idea of revolutionary fervor that has found a home in Tehran and its own vision of encircling the Arabian peninsula.

King Hamad has an uncle named Khalifa bin Salman, he’s the world’s oldest living prime minister.  He’s been on the job over 45 years straight and he embodies the animus most have come to have for this ruling class.  The king himself has only ruled since 1999, he’s managed to both spread profound austerity with monopolizing power on an island that the Saudi’s believe is their’s to manage, yet fail at every step to reform.

In order for Bahrain to survive, the price of oil must double; the Saudi’s have underwritten enormous budget deficits in tandem with other reliable Gulf partners threatened by the Arab Spring.  Having asked McKinsey & Company to write Vision 2030 as a blueprint for market liberalization, Bahrain is stuck in a vicious subsidy trap.  Currently, its bond ratings are rated junk.  Wait. . . it gets worse.

Assaulting a strong demographic trend, Bahrain is home to over 60% Shia.  To eradicate these trends the King as his ministers have built new mansions for Sunni’s while importing a rash of Hindu temples.  (You read that right.)  By hosting a rapid influx of non-Shia foreigners, churches and other Arabic lumpen, the ruling Al-Khalifas in solidarity with other reigning Sunni monarchies are waiting out an impending storm.

Communal tensions are rising; but there is no civil order, no civil society from which a person can find refuge.  Recently, the Islamic State put out a video of a Bahraini ideologue exclaiming that regional Sunni’s should place suicide bombers throughout the Shia in Bahrain.

Bahrain is ground zero for an Arab Spring that never had a chance to take on the deep state.  But don’t worry, for the ruling Sunni’s have no grasp, no fealty or hold on their populations; evidenced in barren industrial baselines, failed liberalization efforts, climbing deficits and irreconcilable political, social aims of a vacant citizenry.

THIS. WILL. NOT. END. WELL.

Bahraini Demonstrators Retake Pearl Roundabout As Army Backs Out

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China’s Blue Water Ambitions?

China’s northern port city of Dalian is the location for American technological spy-craft to witness Beijing’s Naval ambitions, it is here where Beijing fields her first aircraft carrier launched last month to encircle Taiwan and threaten her neighbors in both the East & the South China Sea.

The media coverage of the event was favorable to Beijing, even if their remain nearly insurmountable obstacles for Beijing’s naval ambitions to come to fruition, December 24 saw China begin to thwart U.S. dominance in the Pacific.  For Admiral Wu Shengli, this has been a long time coming.

The Liaoning is China’s first aircraft carrier and Beijing pulled out all the props corralling her with escorts of destroyers, frigates and a corvette.  As the refueling ship arranged for hookup outside the port of Qingdao, they ran her through the Miyako Straits right into the heart of an impending quagmire:  the South China Sea.

Beijing wishes to send threatening signals to every nation in her regional grasp.  She seeks to dominant, with consequences.  By herself, the Liaoning remains incapable of pushing the Americans back to a second island chain far out in the Pacific.  Like Pakistan and North Korea, Beijing seeks absolute security guarantee for oil, goods and communications; her commercial and geo-strategic interests are one.

Their first aircraft carrier is based on a Soviet Kuznetsov class design; it is nothing near in design or operational craft near our Nimitz-class; carrying only 24 J-15’s, these fixed wing aircraft don’t have a catapult, but a lift deck identical to a ski jump.  This means two significant strategic insights regarding capability.  One, China’s J-15’s need to use much less fuel and fewer ordinance.  It also means slower early warning and anti-submarine aircrafts cannot take off from the Liaoning.  She is vulnerable when operating far off shore based air support.  This ship’s hull was taken from a Ukrainian shipyard, this means Beijing’s first aircraft carrier depends on steam turbines, cutting its range, speed and operation tempo.

What can the Liaoning do?  It provides air protection for China’s regional littoral fleets and can be used in disaster missions and evacuations.  Other than that, not much.

Just as the Russian Sukhoi SU-33 jet found it tough to fly night missions off the Syrian coast, Beijing’s J-15 has no catapult, but the Chinese are experimenting on land.  To offset any institutional failure in fielding indigenous aircraft carriers, the Chinese are already fielding shore based anti-ship ballistic missiles called ‘carrier killers’.  The DF-21D & the DF-26 are fielded to shore up China’s near permanent vulnerability.  As of now, the Chinese are hedging, but they may just get it right over time.

In the meantime, the American regime has a cultural advantage, our crews have unrivaled tribal knowledge of operational craft in all weather terrain, something the boys in Beijing don’t have.

5y

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